StoneAge Inc. is completely employee owned through an employee stock ownership plan after the founders sold their share in January.
The Durango-based water blast manufacturer moved toward the business model after starting its employee stock ownership plan in 2015.
An employee stock ownership plan is an ownership model 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.
Founders Jerry Zink and John Wolgamott sold their shares to the ESOP, which allowed ownership to transfer to workers.
“My partner, Jerry Zink, and I believe that by selling our shares to the ESOP, we are creating a sustainable, forward-thinking company committed to improving the lives of its employees,” John Wolgamott, StoneAge’s co-founder and board chairman, said in a news release. “We are proud that all our employees share in the success of StoneAge and find deeper meaning in their work.”
ESOP participants earn shares over time and are paid out by the company repurchasing the shares, typically after leaving the company. The ESOP benefit is maximized the longer an employee stays with the company, and the cash rolls into an IRA until retirement age.
The number of shares an employee owns depends on how long they’ve worked for StoneAge. However, StoneAge managed its ESOP in accordance with U.S. Department of Labor regulations and the Employee Retirement Income Security Act, which means the company must have shares for future employees.
This creates incentive for employees to stay with the company because the longer the employee’s tenure, the more shares they will own in the company.
Having an ESOP model makes StoneAge a subchapter S corporation, which means the corporation does not pay a corporate income tax that passes down to the individual shareholders.
“From a company's perspective, this is really beneficial, because we don’t have leakage at all,” Chief Executive Officer Kerry Siggins said.
A large part of the reason the company pushed toward being 100% employee owned was wealth creation. Siggins said there is a concentration of wealth and ownership in companies can create wealth.
“We're trying to just change that narrative to say, ‘Look capitalism is good, there's a lot of good things about it,” she said. “But it's falling apart, when we have this great concentration of wealth, what an ESOP can do is it can really help distribute that to the people who are working hard every day day in and out to create that value.”
For Siggins, it’s important the company remains in La Plata County.
“Even though we have employees and offices worldwide, our roots are here in Durango,” she said. “Another benefit of being employee owned is that we don't have a parent company saying it really doesn't make sense for you to be in Durango.”
The company has 120 employees located in Durango and 185 total employees worldwide.
tbrown@durangoherald.com
