Still, only about one-third of eligible workers actually participate, said Corey Rosen, who founded the nonprofit National Center for Employee Ownership and briefly served on Carver’s advisory committee.

“It’s nuts,” Rosen said of the low participation rate. “You’re guaranteed a return except for in very rare circumstances. And you could end up doing quite well.”

Some workers may opt out because they don’t understand the plans, like Shapiro’s mother, or prefer being paid upfront rather than deferring it for a future benefit. But the biggest barrier is that many simply can’t afford to set aside the money, according to Jon Burg, the practice leader of Aon’s equity compensation advisory group.

Two Inventors
This group of financially strapped Americans is central to Carver’s business model: Offering an opportunity to increase gains by using leverage, but without downside risk. Shapiro said that concept and the company’s name is a nod to two inventors: George Washington Carver, who helped poor farmers improve agricultural output; and Thomas Edison, who shared some of his intellectual property with other scientists for free.

Here’s how it works: An employee at a manufacturing company making $34,000 a year is allowed to contribute as much as 10 percent of each paycheck over six months to buy stock at a 15 percent discount at the end of that period. She can only afford to set aside 5 percent of her pay -- or $1,700 -- and elects to use a Carver Edison loan for the rest.

The manufacturing company’s stock price was $100 on the first day of the six-month period and $140 on the final day. The 15 percent discount is applied to the lower of the two. So on the final day, the worker’s $1,700 in deferrals plus an equal-size loan from Carver will be enough to purchase 40 shares for $85 apiece. That’s an instant 65 percent gain.

Carver will then immediately sell enough of those shares to cover the loan. In cases when the stock price increase over the six-month period exceeds a certain threshold -- say 25 percent, or $125 in the example above -- Carver will collect and sell a few extra shares. Some of those may be sold in the open market, while others will be sold to banks via options, allowing Carver to generate revenue by collecting a small fee on each contract.

The idea behind using part of the gains to sell options is “to have the market makers pay the bills for factory-floor workers to have more money in their pockets,” Shapiro said.

Downside Protection
In the end, the manufacturing worker will end up with 26.4 shares, worth about $3,700, that are hers to keep or sell. Had she elected to forgo a Carver loan, she would have been left with 20 shares worth $2,800. (Contributions to ESPP stock purchases aren’t tax-deductible, but the example excludes income taxes for simplicity.)

Because the shares are bought at a discount, Carver Edison has a built-in cushion in case of a sudden drop in the stock. To protect itself against a crash, Carver sells the shares within seconds of their being delivered by the company and it assumes the balance sheet risk should the stock price crash or a trading glitch occurs during that short window.