ESOPs Aren’t Fables

Oct. 2, 2019

I’m super fortunate to work for a company that feels like family. It’s this camaraderie that makes me want to really own what I do and do my best for all involved. I know it’s not like this for everyone. For the most part, jobs can be a chore and the grind can be stressful and unfulfilling.

The employees at NewAge Industries -- a Southampton, Pa.-based manufacturer of plastic and rubber tubing for the chemical, pharmaceutical, biopharm, biomedical, food, beverage industries -- share my view behind the rose-colored glasses. As of Sept. 5, the company is 100% owned by its employees through its ESOP (Employee Stock Ownership Plan). The plan to launch an ESOP was hatched years ago by CEO Ken Baker.

In 2006 Baker sold 30 percent of the company to his employees. Ten percent more was sold to the ESOP in 2013, and then another nine percent in 2016, bringing the total percentage of ESOP ownership to 49 percent. Since its inception, the share price has appreciated 975%.

“I’ve had a lot of other business owners ask me, ‘Why employee ownership? Why not just take the highest offer and walk away?’” said Baker in a press release announcing the achievement. “And my response has always been, ‘Because I don’t want to see the company that my father started, and that we’ve worked so hard to build, get broken into pieces, or shuttered, or absorbed by some big conglomerate.’”

If you’ve been paying attention -- even the slightest bit -- to management best practices, you know that business gurus stress the importance of having employees feel a sense of ownership over their roles. This is usually meant in a figurative sense. When you literally give the company to your employees, you start to see a whole new dimension to the concept of ownership.

Joel DeVine, NewAge’s quality control supervisor who has been with the company for 14 years, said that the “ESOP means that we as owners have an understanding about our company and how we all play a fundamental role in not only the success of our business but also in the health of our retirement by remaining focused on our customers and our team members.”

“I’m so glad to have this succession plan in place,” said Baker. “It keeps everyone employed at a progressive and very successful company, and it maintains the pride of ownership we’ve developed over the past 13 years.

“It’s wonderful to see how everyone works together and works through challenges with the customer in mind. The plan assures our customers continuity in supply from a business partner that understands their particular needs.”

Check out this short video to learn more.

Traci Purdum is Chemical Processing’s senior digital editor. She enjoys her role at the magazine as the snarky sister. She considers Editor Mark Rosenzweig to be the well-intentioned uncle and her Publisher, Brian Marz, as the even-keeled dad with great advice. You can email her at [email protected].

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