The Entrepreneurs We All Should Want To Work For
You’ve been reading a lot about famous tech entrepreneurs – and you’ll keep reading about them – due to the understandable focus in our culture on individuals atop organizations and the creation of great wealth.
All good. I have nothing against billionaires. But suppose entrepreneurial success was a team concept, the same fierce capitalism but for the benefit of everyone who works at a company. Well, that alternate reality exists and it’s called employee ownership, a format in use at thousands of U.S. companies employing millions of workers.
At a company owned by an Employee Stock Ownership Plan, or ESOP, profits accumulate for the benefit of rank-and-file workers, employees work harder and smarter because they’re also owners, and companies tend to prosper over long periods of time.
The CEOs don’t tend to become celebrity-business-persons because they’re busy sharing credit for the company’s success with their co-owner employees. I like to call it Capitalism Played As A Team Sport. The largest employee-owned companies include successful firms like Publix Super Markets and CH2M Hill, the engineering and construction giant.
Who are the entrepreneurs I’d recommend people go work for?
–The CEO of WinCo Foods, who insisted I not print his name in an article about the 100-store chain’s amazing success and its hundreds of grocery clerks sitting on seven-figure retirement account balances.
–Rick Carpenter, former majority owner of Central States Manufacturing Co., in Lowell, Ark., who turned a tiny family-owned metal bending operation into one of the country’s biggest building component concerns by harnessing the brains and energy of his employees, who’re now his co-owners. Truck driver with a seven-figure retirement account balance, anyone?
–Maureen Beal, CEO of National Van Lines in Broadview, Ill., who decided her third-generation family company should enlarge the family, and is in the process of selling the company to employees. The ESOP is fairly new, but I suspect National Van Lines will be around for a long time, thanks to its owner-workers.
–John Estey, who as CEO of S&C Electric in Chicago, kept the $700 million-a-year maker of equipment for utilities independent by arranging the sale of stock held by family heirs to an ESOP. S&C is a model of value-added manufacturing in America’s heartland, and its 2,000-plus employees now have an opportunity to build substantial retirement nest eggs for themselves by the smart work they do.
– Gary Erickson and Kit Crawford of Clif Bar, whose 2010 partial ESOP rewards loyal employees and supports the company’s goals of operating a truly sustainable business.
–Dick and Barbara Couch, who arranged the sale of their controlling stake in Hypertherm, a maker of precision cutting systems, to the company’s more than 1,300 employees to fully capture the productivity gains and innovation that come from worker-owners.
–Henry Givray, CEO of SmithBucklin, the nation’s largest association management firm, who initially bought the company with private equity investors but then engineered an ESOP buyout of those investors. The result: rapid growth in the value of SmithBucklin and an employee base comfortable about its retirement prospects and focused on customers.
What these entrepreneurs also know is that selling to an ESOP is not a giveaway. Due to significant tax benefits and also to the productivity gains from employee ownership, ESOPs can afford to pay as much or more as private equity buyers. So fair value and ESOPs are well acquainted. The tax benefits allow a seller of a C-Corporation to defer capital gains taxes if he or she reinvests the proceeds in qualifying securities, namely stocks. And the ongoing company, if it’s an S-Corporation, doesn’t pay federal or most state income taxes, with those levies deferred until employees retire or otherwise cash in their stock.