Although employee stock ownership plans (ESOPs) have existed since 1974, many people are not aware of their many benefits for both businesses and employees. Montgomery County Community College (MCCC) recently held the first of a series of ongoing conversations about ESOPs and its new Baker Center of Excellence for Employee Ownership and Business Transformation to share this beneficial information with the community.

The online panel discussion, “How ESOPs Can Unlock Success for Your Business and Transform Our Community,” featured several guest speakers who shared their expertise and perspectives on ESOPs:

• Kenneth Baker, CEO, NewAge Industries, 100% employee-owned company in Southampton, co-founder and chair of the Pennsylvania Center for employee ownership
• David Zellers Jr., Director of Commerce, Montgomery County
• Edward Renenger, President and CEO, SES ESOP Strategies, Bala Cynwyd
• Paul K. Johnson, MCCC Marketing/Management Assistant Professor
• Ford Smith, Estimator, Employee Owner, at IT Landes, Harleysville

 

 

 

 

 

MCCC Dean of Workforce and Economic Development Kyle Longacre served as the facilitator, and Dr. Victoria L. Bastecki-Perez, MCCC President, and Rep. Napoleon Nelson, MCCC Trustee, shared welcoming remarks.

Baker started the discussion by describing why NewAge Industries became an ESOP approximately 15 years ago.

“I have always wanted to have a high-performance company, and I thought if I didn’t give ownership to the employees, I wouldn’t get a high-performance company because there is a difference between an employee and employee-owner,” he said. “We’ve been an ESOP for 15 years and it’s been very successful.”

Baker, a longtime advocate of MCCC and its mission, donated $3 million to MCCC for the creation of the Baker Center of Excellence, which will assist employers and employees in the region by providing educational programs and resources to support ESOPs and other dynamic employer-employee partnerships through programs, workshops and events. The Baker Center of Excellence also will include a resource library and a certificate program to advance employee skills and leadership.

As the discussion continued, Renenger explained why the Montgomery County region is a good business landscape for ESOPs.

“Montgomery County has an interesting confluence of very successful businesses with deep roots in the community, and they have a desire to benefit the community as a whole,” he said. “There is the idea to keep jobs local and give back to the community, and ESOPs are very good at that when you look at them statistically.”

He further explained that nationally employees of ESOPs have more retirement wealth (up to two and a half times larger) than non-ESOP companies. He also believes Montgomery County is poised to be a leader when it comes to employee ownership.

Baker agreed that his employees have more retirement wealth than other employees do.

“I’ll give you a statistic about the distribution of wealth. We now have 32 millionaires working here at NewAge out of 240 employees,” he said.

Zellers said that Montgomery County’s Commerce Department always is looking for stories of success to help retain and attract businesses to the area. He said local ownership and generation-to-generation businesses make “a powerful narrative for the area.”

He added that communities over time tend to identify with the businesses in their communities, developing an intrinsic link, and these kinds of structures only add weight to that connection and “allow for longer-term generational wealth, the kind of things that really do transform and build communities over time.”

From an employee perspective, Smith spoke about how he looked for a company where he could make a long-term commitment for employment and plan for retirement. IT Landis provides that for him through employee ownership.

At MCCC, the concept of ESOPs is included in business classes, Johnson said, because MCCC supports entrepreneurship, business growth and innovation. Johnson said Baker regularly visits his marketing classes and speaks about the concept of ESOPs. For their courses, students create marketing plans to promote the benefits of ESOPs for business plans.

The Baker Center, Longacre said, will help to take these conversations to the next level in the community and will serve as a hub of expertise for businesses.

“What I hope is that we can educate a lot of selling shareholders, like myself, as well as employees of companies about the benefits and the structure and rules of ESOPs, and we can create a lot more of these in Montgomery County and Pennsylvania,” Baker said. “I think it is absolutely the best business model out there; there really is no other business model which has all the benefits and features that ESOPs have.”

The biggest challenge for ESOPs, said Renenger, is awareness and getting people to understand the opportunities with this business model. The Baker Center will help to educate and train people about the concept and how it can promote growth for a business, particularly now as the economy begins to recover from the effects of the pandemic, and how it benefits employees.

“There is a sense of pride when you’re part of any stock company,” Smith said. “You are your own reason for success or failure at an ESOP company. The company is only going to be as successful as the owners want it to be.”

The next step for the Baker Center involves the hiring of an executive director in the next several weeks, said Longacre.