ESOPs Produce Big Results
Publix Supermarkets, Hy-Vee, Wawa, STS Tire & Auto Centers, DCH Auto Group are just some of the successful companies that have gotten that way because of their owners, who by-the-way, also turn out to be their employees.
Today, according to The ESOP (employee stock ownership plan) Association, there are 11,000 companies owned in part or fully by employees. Of this group, 3,500 companies are majority-owned by employees.
Corey Rosen, executive director of the National Center for Employee Ownership, told the Kansas City Star that changes in the tax code have made it more beneficial for companies to operate ESOPs.
“It used to be ESOPs typically owned a minority 20, 30, 40 percent,” he said. “Maybe 10 to 15 percent of ESOPs were majority owned.” Today, according to Mr. Rosen, between 20 and 30 percent of ESOP companies are 100 percent employee owned.
Across retailing, there are a number of businesses that are employee-owned.
In food retailing, Publix Supermarkets and Hy-Vee are both 100 percent owned by employees. Others, such as Brookshire Grocery, Harps Food Stores, K-Va-T Stores, Piggly Wiggly Carolina Co., QuikTrip and Wawa, are also ESOP companies, according to The ESOP association.
In the automotive services arena, STS Tire & Auto Centers headquartered in Somerset, NJ is the largest independent tire and auto service company in the Northeast. The company, which is entirely employee-owned, has 70 tire and service center locations in New Jersey, New York and Pennsylvania.
Companies looking to improve business results might do well to consider going the ESOP route. According to one study conducted by two Rutgers University professors in 2000, ESOPs increase sales, employment, and sales per employee by 2.3 percent to 2.4 percent per year over non-ESOP companies. Employee productivity at ESOP companies is 4.4 percent better than in non-ESOP businesses.
Discussion Questions: Do you believe ESOP companies that are majority-owned by employees have an advantage over non-ESOP businesses and those where workers
have minority ownership? Why? Do you see similarities when comparing leading ESOP companies in the retailing field?
- Employee ownership expands – Kansas City Star (free reg. required)
- The ESOP Association
- The National Center for Employee Ownership (NCEO)