Sharing the wealth
The employees of many organizations around town are no doubt invested in their work.
For the employees of Electronic Theatre Controls (ETC), headquartered in Middleton, investment in their work took on a slightly different meaning last month, when company CEO Fred Foster informed ETC’s 850 U.S. employees that they were being given 33% of ETC’s stock by the company’s ownership group, which includes fellow ETC owners, Susan Foster, Gary Bewick, and Bob Gilson. This uniquely structured Employee Stock Ownership Program (ESOP) will be distributed to employees, regardless of their position, as a retirement benefit.
“It’s an awesome feeling knowing the company truly values me as an employee,” says Ed Hurley, a maintenance technician. “I couldn’t be more proud to work for ETC.” With a lifelong interest in building and fixing things, Hurley works to keep facilities and machines running in ETC’s Mazomanie and Middleton facilities, where about 99% of ETC’s products are made.
“I’m so proud to have created a program with my fellow ETC owners that recognizes each employee who works with us,” Fred Foster says. “It was a lot of fun seeing how surprised employees were when they found out about the ESOP.”
Employees based at ETC’s U.S. offices, as well as future U.S. employees, are eligible for the ESOP, Foster says. International ETC employees will be given additional benefits that provide similar rewards to their colleagues based in the U.S. The program also gives employees the opportunity to vote should a business try to acquire ETC in the future.
The ESOP plan is also being offered in addition to other benefits that ETC employees already receive, such as a matching 401(k) program and quarterly company-wide profit sharing bonuses.
“We hope that this ESOP is encouraging for future employees to join the ETC team and in helping to retain current employees,” Foster notes.
The ESOP plan will distribute 50% of the shares equally to every employee, regardless of tenure or position, and the other 50% are allocated based on an employee’s salary, according to Foster.
There is a five-year vesting period, along with a 10-year allocation of shares. ETC is also covering all of the plan expenses, so employees aren’t facing any unexpected expenses or contributions as part of the program.
Foster says because an ESOP is a retirement program, the intention is to pay out ESOP funds at retirement, death, or disability. If an employee leaves before one of these events, there are tax penalties to the employee, but employees who leave ETC can roll the funds into an IRA or other type of fund to avoid tax penalties.
As employees leave the company, Foster adds, their shares are repurchased by the ESOP and become available for redistribution to future employees.
The initial shares are being distributed in equal amounts over the next 10 years. As the company grows in value, the shares grow in value, as well. As employees retire and redeem shares, those shares become available in the ESOP. Over time, the owners have the option to sell more shares to the ESOP.
“My pride and the pride of this company is in our employees. It’s just the right thing to do to recognize them for contributing to the success of our company,” says Foster. “Another reason we’ve been so successful over the years is because we’re privately held, so we’ve been able to run ourselves. By offering this ESOP, we’re making certain that in a year, five years, and generations to come, the company is preserved and employees have a voice in its future.”
Click here to sign up for the free IB ezine – your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.