Employee Stock Ownership Plans (ESOPs)

MODELS & BEST PRACTICES

Acadian Ambulance Services (Lafayette, LA)
www.acadian.com
Founded in 1971 by veterans from the Vietnam War, Acadian became a 30% ESOP-owned company in 1993 and a majority employee-owned company after 1998. Today, the company has over 200 ambulances, 2,000 employees, and a $180 million budget and is the nation’s largest privately held paramedic firm. Awarded a “gold standard” award for patient care at a national conference of emergency medical personnel in August 2005, the company would be tested shortly afterward, as Hurricane Katrina forced the evacuation of New Orleans’ flooded hospitals. In the event, Acadian was the only local institution to have maintained a reliable back-up communications system, and Acadian employees rescued more than 7,000 people.

Appleton (Appleton, WI)
www.appletonideas.com
Appleton is the world’s largest producer of carbonless paper. Once a division of National Cash Register (NCR), in 2001 employees invested in $107 million from their pension monies to finance an $810 million buy-out, one of the largest employee buy-outs ever. Today, the 100% employee-owned company employs 3,400 people, including 1,400 in the Appleton area.

Blue Ridge Paper Products (Canton, NC)
www.blueridgepaper.com
Founded in 1905, Blue Ridge Paper Products employees, through an ESOP, purchased 45% of the company in 1999, led by Local 507 of the Paper, Allied-Industrial, Chemical and Energy (PACE). Workers elect 4 of the 11 Board members. The company makes paperboard and envelopes. It employs 2,000.

Carris Reels (Rutland, VT)
www.carris.com
Carris Reels began as a family-owned business in 1951. It produces a wide variety of reels and packaging for the cable and wire industry. The company has grown to have 750 employees in 7 manufacturing and 10 assembly sites across the country. Employees now own over 40% of the company through their ESOP.

Chatsworth Products (Los Angeles, CA)
www.chatsworth.com
Once a division of a Fortune 500 company (the Harris Company), Chatsworth Products, which produces storage devices for mainframe computer equipment and data, became a 100% employee-owned company in 1991. The company has grown to employ over 900 people today.

Chroma Technology Corp. (Rockingham), VT)
www.chroma.com
Founded in 1991, Chroma is an employee-owned company whose primary product is filters that are used in microscopes. Technically, Chroma is not an ESOP, but it is nonetheless 100 percent employee owned, with each individual's ownership staking varying according to seniority. In its first year, Chroma employed 7 and had sales of $300,000. A decade later, the number of employee-owners had risen to 54 and sales exceeded $12 million.

The Davey Tree Expert Company (Kent, OH)
www.davey.com
Founded as a family-owned business in 1880, the company has expanded to offer tree and lawn care services in 40 states and 4 Canadian provinces. A 100% employee-owned company since 1979, the company currently has approximately 5,000 employee-owners nationwide.

Elkhorn Construction (Evanston, WY)
www.elkhornconstruction.com
Founded in 1984, Elkhorn Construction is a 100% employee-owned General Contractor specializing in the construction and maintenance of oil, natural gas, petrochemical and pipeline facilities as well as fossil fuel power/steam plants and mining operations, with a core workforce of more than 100 employees. Elkhorn also provides construction services for public works projects in the civil, mechanical, and electrical fields. Each of the three employees who retired in 2003 had accumulated personal ESOP account shares worth greater than $200,000.

W. L. Gore (Newark, DE)
www.gore.com
Founded in 1958, the company, maker of GoreTex products, has expanded to have over 6,000 employees. The company’s web site focuses on its egalitarian employment culture, not its ownership structure. But W.L. Gore employees own approximately 90% of the company through their ESOP. For further detail, see this case study from Huizenga Business School at Nova Southeastern University in Fort Lauderdale, Florida www.huizenga.nova.edu/5012/cases/WlGore.html

*NEW*
King Arthur Flour (Boston, Mass)
www.kingarthurflour.com
Started in Boston in 1790 and now based in Norwich, Vermont, America's oldest flour company has grown from a family-owned, mail-order business with five employees in 1990 to a 100 percent employee-owned (ESOP) business with over 180 employees and $45 million in annual sales. In January 2008, King Arthur Flour became a B-corporation (indicating a commitment to public benefit as well as profit). It was also among the 25 companies listed in WorldBlu's 2007 list of most democratic workplaces.

March Westin (Morgantown, WV)
www.marchwestin.com
Founded in 1984, March Westin functions as a full-service engineering, general contracting, and design-build firm which handles projects ranging from a few thousand dollars to more than $45 million. Conversion to an ESOP began in 1993. Currently, 81 employees own 36% of the company, with the company having set a goal of majority employee ownership by the end of the decade.

Publix (Lakeland, FL)
www.publix.com
Publix, a Lakeland, Florida-based supermarket with branches throughout the southeastern United States, has made its employees part owners of the company since the 1930s. Today, it is the largest employee-owned supermarket chain in the country, with over 128,000 employees and annual sales of $16.5 billion.

Reflexite (Avon, CT)
www.reflexite.com
Founded in 1970, Reflexite sells retro-reflective products (that is, products that reflect light back to their source), thereby helping to improve worker safety and nighttime visibility. Originally a family-owned company, the ESOP was formed in 1985 as a means to raise capital without having to sell the company to competitor 3M. By the late 1990s, employees owned an estimated 59% of the company.

Schreiber Foods (Green Bay, WI)
www.schreiberfoods.com
Founded in 1945, Schreiber has grown to become the world’s largest privately held cheese company, with 4,200 employees and over $2 billion in annual sales. Since 1999, it has been 100% employee-owned through an ESOP.

Wayfield Foods (Atlanta, GA)
www.wayfieldfoods.com
Founded in 1982 by two Atlanta-area businessmen, Wayfield has grown to have 12 locations, the majority of which serve inner city communities, and over 500 employees. Employees are part owners of the store through their participation in Wayfield’s employee stock ownership plan.

Zachary’s Pizza (Oakland, CA)
www.zacharys.com
The 115-employee Zachary’s Chicago Pizza restaurant provides an example of how the ESOP form can allow family business owners to transfer ownership over time to their employees as they retire. In Zachary’s case, conversion to full ESOP ownership began in 2003, with 100% employee ownership expected by 2010. Zachowski, in a fall 2004 interview with the Berkeley-based Daily Californian newspaper, explained the rationale for creating the ESOP: “If we sold the business to a corporation, the culture will change and so will the food and the staff. This is the only way for us to keep it like it is without us being there.”