Employee ownership is neither well known nor, often, well understood. However, at its core it is a simple concept: ownership of an enterprise by those most impacted and able to determine its success.
Employee-owners understand that our collective success leads to our individual success and vice versa. In an employee-owned company, the hard work of employees and financial rewards that come from that work accrue to the employees because they own the company. There isn’t any greater incentive, engagement and ownership in what you do than to be working for your own benefit.
Employee stock ownership plans – ESOPs – have been around for decades. They are enabled by federal law and regulated by the Internal Revenue Service and the U.S. Department of Labor. Fundamentally, an ESOP is a retirement plan that functions very much like a 401(k). There are more than 6,000 ESOPs in the U.S. with more than 14 million participants.
While the retirement benefit and ability to build wealth through an ESOP are wonderful, the culture in an employee-owned company is the biggest benefit. From young to not-so-young, our experience is that employee-owners in ESOPs care and are enthused about the work they do and how their work is connected to the success of the company. Employee-owners understand that it is employees, not companies, who have relationships with customers, who deliver services, make products and, ultimately, make a company successful. Therefore, it is employees who should benefit from the application of their skills and experience and the outcomes of their efforts.
Our company, Sebago Technics, was started in 1981 by Walter P. Stinson. Like many entrepreneurs, he began at his kitchen table, took risks and worked hard. Sebago quickly gained a well-earned reputation, hired more and more people and served hundreds, then thousands, of property owners, businesses, contractors, developers and communities. By the mid-1990s Sebago had grown into a multidisciplinary engineering firm employing dozens of professionals.
Though Walt was more than 10 years from retirement, he began to think about ownership succession. He explored the common options: sale to another company (often out-of-state), or to one or two current employees, or simply running the business until retirement, then closing it. However, during his search he came upon employee stock ownership plans. After studying he determined that an ESOP was the best choice for one compelling reason – the success of the company was because of its employees, and it was they who should reap the benefits going forward.
In 1998, Sebago Technics became one of a few ESOPs in Maine. Today, over 20 years later Sebago Technics stands as one of Maine’s largest engineering firms, with tenured employees who are proud owners of not only the company, but also significant ESOP retirement accounts.
ESOPs in Maine are on the rise. Over the past five years, the number of ESOPs in Maine is estimated to have grown from 15 to approximately 50. Employee-owned companies now represent every corner of the state from Fort Kent to Kittery. They span every industry from construction to engineering, financial services to agriculture and manufacturing to technology. Maine ESOP companies represent some of our best-known brands and recognizable businesses: companies such as Cianbro, Sargent, Reed & Reed, Landry French, Daigle Oil, Johnny’s Selected Seeds, ReVision Energy, Clark Insurance, Portland Air Freight, Dennis Paper, Howell Labs, Moody’s Collision, Lanco and dozens more.
L.D. 1520 (“An Act to Create and Sustain Jobs through Development of Employee-Owned Businesses and Cooperatives”), currently before the Legislature, is an opportunity to further grow employee ownership in Maine. If passed, it would support and incentivize the creation of new ESOPs and a forum to share ideas. Passage of L.D. 1520 would place Maine among the growing number of states where state centers for employee ownership have helped grow, inform and sustain employee ownership.
Passage of L.D. 1520 will support the continued growth of ESOPs and cooperatives in Maine, and recognize, at the highest levels, that local ownership and control are vital to our economic future. It will acknowledge that employees should benefit from their work with more than just a paycheck. In these ways it would hark back to the beginnings of business in Maine, where most people were self-employed and where success and destiny were in proportion to their contributions.
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