ESOP pays off for owner and employees.
Union Grove True Value Lumber and Hardware, recently named Business of the Year by the Union Grove Chamber of Commerce, has one of the oldest Employee Stock Ownership Plans (ESOP) in the state of Wisconsin.
"We became an ESOP in 1978," says Randy Prideaux, store manager and company president. "The Wisconsin ESOP law was written in 1977."
The store was originally founded as a partnership in 1872 as Myer and Huck. In 1952, the Huck family took over sole ownership of the 12,0000-square-foot store. Twenty-six years later, owner Clifford Huck transitioned the company to an ESOP.
"Mr. Huck started it as a retirement vehicle for himself and as a pension plan for his employees," points out Prideaux.
Until he officially retired, Huck held controlling interest and ran the store. The employee-owners held non-voting stock, which offered them a pension plan but no active role. After Huck's retirement, a board was added to help direct the largely contractor-based business. In 2004, the last of Huck's stock was bought out and the ESOP was closed so no new employees can buy into the plan. Only 14 of the original employee-owners remain, comprising two-thirds of the 21 Union Grove employees.
"The employees are motivated to work hard to increase sales because it increases the value of their stock," says Prideaux. "It is in their best interest to do the best they can. When they retire, they get the benefit of selling their stock. Several employees who were with the company 36 and 42 years received big payoffs when they retired."
Prideaux, who has worked at the store for 38 years, has controlling interest and makes decisions with guidance from a board of directors consisting of six people who meet four times a year. According to Prideaux, the store has had little turnover. "We're small enough to be flexible and big enough to generate good business," he says.
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|Title Annotation:||Employee Incentives; Employee Stock Ownership Plans|
|Article Type:||Brief article|
|Date:||Nov 1, 2006|
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