When I turned 60 years old, 35 years into my run as president and CEO of Stockwell Elastomerics, I started thinking seriously about the future of the company that had been in my family since my great grandfather founded it in 1919.
We had built a successful business in Philadelphia, growing to three buildings and employing more than 100 workers throughout the city, and providing custom silicone gaskets to customers near and far. Over the years, I fended off inquiries from just about everyone—larger competitors, suppliers, private equity firms, and strategic corporations. One competitor even put a signed check on a table and asked me to fill in the number. I declined.
But by 2014, it became clear I wouldn’t be able to lead Stockwell forever and needed to find a solution that honored the hard work and contributions of the men and women on the production floor who made us successful. I thought about what would happen to my employees if I sold to a strategic buyer or private equity firm for top dollar and they moved the factory and stranded the employees who made that very sale possible. It happens all the time. I have known several former business owners who did that and came to regret the decision. I wasn’t going to be one of those owners who held out for the top dollar while putting my people at risk.
The ESOP option
As I started looking into options, I heard of something called an employee stock ownership plan, or ESOP, a qualified retirement plan that allows companies to share ownership with its workers. I was introduced to Ken Baker, who owned and ran New Age Industries, a model ESOP company in the area. We had lunch and I was intrigued. I went to a few ESOP conferences, eager to learn as much as I could. I met the CEO of Harpoon Brewery, who used an ESOP to leverage a deal buying out a partner, and it all just began to make more sense to me.
I put my toe in the water in 2017 and transitioned the company to a 30% ESOP to start. The idea was to eventually get to 100%, but I wanted to make sure that as I ceded control of the company, I did everything I could to make sure it would stay in Philadelphia and remain employee owned in perpetuity. I know forever is a big word. How can you really predict what’s going to happen decades down the road? My goal was to set the company up to succeed for as long as possible.
I talked to a lot of experts and finally was convinced we had a model in place that would make it almost impossible for the company to be sold to a third party. We went to 45% employee owned in 2021 and then, last year, to 100%.
Employees take ownership
When I first told the employees I was planning to retire and sell them the company, it took a while for it to sink in for them. “Bill’s selling the business to us? What’s going on?” There was a bit of mystery about it. They had never heard of an ESOP. There was some excitement, but it took time, and repeated communication, to get everyone to understand what it meant for them.
I made the ESOP decision for employees like Mike Sisco, a production engineering specialist who ensures our production processes are correctly followed. He’s got a focus on detail born from nearly four decades at Stockwell. It’s people like Mike, and others, who have been with the company for 30 years or more, who made this company successful and that I thought of as I pondered Stockwell’s future.
For me, it ended up being an easy decision. I had become so involved on the production floor with our people and felt that if I could provide opportunity for them, it was a no-brainer. As business owners, we don’t need the last nickel. We should be open to sharing some of the wealth.
I have a firm belief that the regularity of good work, at a good wage, is a foundation to a good life. At Stockwell, we are proud to hire from the Philadelphia neighborhoods and make a difference in their lives. And by transitioning to 100% employee owned, we expect to be here, making a difference, for decades to come.
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This story was originally featured on Fortune.com
