IGNACIO – Companies looking to boost productivity and engagement might find the key in employee ownership – empowering workers to take a stake in the business' success.
That was one of the primary topics during this year’s La Plata Economic Development Alliance Summit.
As hundreds in the La Plata County business community flooded the conference rooms of the Sky Ute Casino in Ignacio, many tuned into the discussion on employee-owned businesses led by Peak Food & Beverage CEO Kris Oyler; StoneAge Inc. CEO Kerry Siggins; and Matt Lucina, business support program manager for the Colorado Office of Economic Development & International Trade.
Employee ownership allows workers who typically aren’t seen as investors, such as restaurant servers or assembly line workers, to become partial owners of the company.
“As a business owner, you’re always wanting your employees to take ownership,” said Oyler, who presented about Peak’s evolution into an employee-owned business.
“Taking ownership” is often a cliché used by business owners in an attempt to get their employees to take pride in their work. But under the employee ownership model it takes on a whole new meaning.
Oyler said when employees invest in the company, it gives them a much larger sense of accountability.
“It just makes a difference on how they interact every day with the other employees and how they interact with the customers,” he said. “It just takes it up another notch.”
Peak Food and Beverage is a limited liability corporation developed in 1996 which now owns five Durango restaurants: Steamworks Brewing Co., El Moro Spirits and Tavern and three different Homeslice locations throughout Durango.
Currently, the company is about 40% employee-owned with over 45 employee-owners. The employee ownership structure includes equity, profits, interest and company voting rights.
The company operates its employee ownership plan through an alternative equity structure because an employee stock ownership plan was too expensive.
Oyler said there are about 1,500 available units of the company that he sells to employees. Unlike a corporation, which issues shares of stock to represent ownership, an LLC utilizes membership units to represent an owner’s stake in the business.
StoneAge Inc. has been at the forefront of employee ownership using an employee stock ownership plan (ESOP).
In 2023, StoneAge became completely employee owned using the ESOP method.
An ESOP is essentially an ownership model that is best accessed at retirement, similar to a 401(k) plan, but instead of investing in the stock market, the ESOP trust buys company stock and holds its assets in a trust for employees.
Siggins said that ESOPs and profit-sharing plans create a direct link between employee efforts and company success, creating a sense of ownership, loyalty and engagement.
Siggins said the downfall with using the ESOP method is that it is expensive. Upfront, the company spent about $300,000 to start the ESOP. And the company spends about $75,000 per year to maintain the plan. StoneAge operates internationally in the United Kingdom, Netherlands and France.
StoneAge has a global team of about 189 employees.
“We have what we call a phantom or a mirrored ESOP,” Siggins said. “Our international employees get to participate. They don’t get the tax benefits like our U.S. staff participants get, but it’s still better than nothing.”
She said part of the difficulty operating the ESOP method on an international level is understanding the tax implications in each county where the company operates.
“We have to figure out what that looks like and what the tax implications are going to be for those employees,” Siggins said. “But it really creates this one team atmosphere, because everyone is a part of it. So they get the same increase in stock price.”
At the state level, OEDIT has been promoting employee ownership by introducing an Employee Ownership Tax Credit in 2021.
The Employee Ownership Tax Credit is offered to Colorado-based businesses and their employees as an incentive to create or expand eligible employee ownership models.
Those models include employee stock ownership plans, worker-owned cooperatives, employee ownership trusts, LLC memberships, phantom stock, profit interests, restricted stock, stock appreciation rights, stock options and synthetic equity.
Businesses can also access cash collateral support loans through OEDIT’s Cash Collateral Support program.
“Colorado is really leading the way (in employee owned initiatives),” Siggins said.
The program helps small- and medium-sized businesses in Colorado secure loans they might not qualify for as a result of insufficient collateral. By leveraging modest public resources, the credit enhancement encourages private lenders to extend financing to businesses.
Lenders can request collateral support for up to 25% of the loan amount or $500,000, whichever is lower (or up to 40% or $800,000 for employee ownership loans). Additional flexibility may be available for specific transactions, particularly those promoting employee ownership.
“We’re expecting other states to follow, where now a company can claim a year-over-year tax credit of up to $50,000 just for being employee owned,” Lucina said.
tbrown@durangoherald.com
