Celebrating Michael Keeling, ESOP Champion and Farsighted Leader
Attending last year’s annual national conference of the ESOP Association, I marveled at how it has grown. Once a gathering of roughly several dozen people, it has become the premier conference of employee ownership advocates, with nearly 1,000 attendees.
Many people have contributed to the success of the ESOP movement over the past three decades, but it is largely inspired by the work and vision of one tireless champion, J. Michael Keeling, who served as the trade group’s president and chief staff officer for 28 of its 41 years (and is, I am happy to write, my good friend). The ESOP community will pay tribute to Michael, who retired March 1, at this year’s conference taking place May 22-24 in Washington, D.C.
There is much to honor Michael for because, quite frankly, he viewed the promotion of employee ownership as his life’s mission, a trust that went well beyond the formal duties of his job. Michael was instrumental in transforming the landscape of employee ownership, consistent with his belief that “a well-managed employee-owned company is not a destination, it is a journey.”
Today, an estimated 6,660 ESOP companies employ nearly 14.3 million participants nationally, and close to 2,000 other profit-sharing and stock bonus plans invest substantially in company stock that mirror ESOPs in other ways. Altogether about 28 million employees participate in some sort of employee ownership plan, controlling about 8% of corporate equity, estimates the National Center for Employee Ownership.
It wasn’t always this way. Michael spurred the growth of employee ownership by making the ESOP Association much more than a lobbying and political advocacy force. Through his leadership and drive, the ESOP Association and the Employee Ownership Foundation he began in the mid-1990s boosted employee ownership through a trifecta of research, professional development and state-level grass roots support.
Let’s start with research. Michael realized early on that to win widespread public and legislative support, the association needed valid and independent data to demonstrate how well employee-owned companies perform. Under the aegis of the Employee Ownership Foundation and often working in collaboration with Rutgers University and the National Center for Employee Ownership, he saw to it that research was generated that provided the validation the employee ownership movement required.
Michael also knew that ESOPs would need ethical and legal standards and skilled professionals able to meet the exacting standards set by the Department of Labor and other regulators. The professional committees he helped established promulgated critical guidelines that fostered ESOP formation, reporting and operation consistent with federal legislation and spurred the development of ESOP managerial talent.
Finally, where there was once only a single National ESOP Association that lobbied once each year in Washington, Michael encouraged the formation of vibrant state chapters. There are now 18 of them, across the country, representing the heart of industrial America. They spread the word about the benefits of employee ownership from peer to peer, provide local knowledge and access to expertise, and serve as places to convene and learn about employee ownership.
Michael never wavered in seeing the vast potential for employee ownership, even though early in his Association tenure, when he attended political receptions in Washington and acquaintances learned where he worked, they offered condolences. At the time, Michael said, “They think I’m part of a dying institution.” That, he responded, “couldn’t be further from the truth,” noting membership and revenue were strong and growth was steady.
Thankfully Michael persevered. Just consider these recent research findings from Rutgers researchers and others:
- ESOPs tend to have higher productivity, lower employee turnover and more commitment to the local economy.
- Employee ownership can help protect jobs during economic downturns, with ESOPs having only half the layoffs of otherwise-similar companies in the last two recessions.
- The average worker at an employee-owned company has accumulated $134,000 in wealth from their stake.
Thanks to Michael’s leadership, the future for ESOPs and employee ownership looks bright. Consider that KKR, among the world’s largest private equity firms, now offers a broad-based ownership plan among the industrial companies it owns that encompasses all employees, not just a select group of senior managers. Or that the Harvard Business Review last August ran an article extolling the benefits of employee ownership. We are now seeing multigenerational ESOP companies, like Dexter Apache Holdings, based in Iowa, that possess an ownership structure that can help them remain private for life, something that few other models can provide.
Is our task complete? Not by any means, as much more remains to be done. The biggest obstacle continues to be ignorance, by business owners and advisors who don’t fully appreciate the benefits of an ESOP as an alternative and understand its pros and cons. Too often, employee ownership is not on the table, where it should be the first resort, not the last, among options for completing business transitions.
But are we much further along than we were thirty or even ten years ago? Absolutely, in large measure due to Michael’s pioneering work. As his successor, J. Bonham Carter, previously chairman of Public Policy and Government Relations at Manatt, Phelps & Phillips, gets ready to assume his position, we say “thank you!” to Michael for his passion, leadership and enormous impact on the employee ownership movement in the United States.