NORWALK, Ohio — Custom upholstery manufacturer Norwalk Furniture has entered into an agreement to give ownership to its employees through an employee stock ownership plan.
Effective Sept. 1 and each year thereafter, all full-time employees will be given shares in the company through their retirement savings. The benefit is funded entirely by the company and requires no out-of-pocket investment by employees. The value of the shares at retirement will depend on the long-term performance of the organization.
Upon completion of the transition, Norwalk’s new owners through the ESOP currently will comprise 278 employees at the company’s 440,000-square-foot plant here.
“This is the next chapter of the reinvention of Norwalk,” said Dan White, lead investor and CEO of Norwalk Furniture. “In 2008, 12 Norwalk-area families bought the recently closed company and turned it into the thriving, healthy business it is today. The primary intention of that purchase was to keep jobs in the local community.”
Norwalk will continue to be led by its current executive team. Dan White will chair a newly formed board that includes internal and outside directors, and Caroline Hipple will continue to serve as president. The existing executive team remains in place, including: Troy Pittenger, vice president of finance; Scot Kanaly, vice president of sales; Sheila Buckingham, vice president of marketing; Tim Hallock, vice president of manufacturing; and Dixon Bartlett of HB2 resources, chief creative officer.
“This transition highlights several very important goals for our company’s future,” said White. “First, an ESOP is the perfect way to make sure our company’s future growth and profitability accrue to the benefit of the people who make it possible, our employee-owners. Second, it enables us to implement a long-term strategy that will continue to provide local jobs, helping our community to thrive for generations to come.”
Hipple added that Norwalk has “long strived to be the employer of choice in our town, and we have done so by staying true to our local community and through continually improving our work-life balance and our employee benefits. I want to personally thank our investors and our dedicated employees who have made this all possible. We certainly have a bright future ahead of us.”
A year in the making
Hipple said Norwalk’s board approved exploration of an ESOP last fall after exploring possible options for the company moving ahead. An ESOP fit the vision for the 12 area families that invested in and saved the company in 2008: keeping and adding jobs in the local community.
“You could do a strategic sale — we know Chinese companies are looking for domestic and custom capability — but that didn’t fit their vision,” Hipple said in a follow-up phone interview. “We looked at an MBO, but that has had a checkered past. We started looking at what you need for an ESOP — a healthy, financially stable company, which we now have — and we realized we were more culturally attuned to an ESOP” than other alternatives.
Columbus, Ohio-based financial services firm Lazear Capital, which has a specialty in ESOPs, guided the Norwalk through the ESOP feasibility study, which provided a road map of the options for the plan. Lazear is managing the transaction process including the structuring and all negotiations with the ESOP Trust on behalf of the selling shareholders to deliver on the goals the team set out to achieve through the transaction.
The company also is working with the Benesch Law Firm, Reminger Law Firm, Payne/Nickles CPA and Civista Bank to complete the transaction. Civista played an integral role in the development of Norwalk’s financial restructuring in 2008 and will continue to be part of the company’s new ESOP program moving forward.
Multiple benefits
Hipple said the ESOP is a way of saying “thank you” to the 12 investing families with a return on their investment and saying the same to the employees vital to Norwalk’s success. The model fits an employee-centered focus — “We make sofas so we can employee people,” Hipple noted — and offers several benefits that support future success. One is the ESOP’s tax-free status.
“Instead of dividends to investors to pay taxes, we can use that money to pay down debt taken on to give the money to investors to get this funded. When the debt is paid that money goes into employees’ stock value, so their good performance now will benefit them in a unique way,” Hipple said. “Uncle Sam gets his money after an employee retires. As we perform better, the stock does better toward (employees’) retirement.”
Once a year, Norwalk will evaluate the company and issue shares and a share price to employees. The deal is structured so employees get share points based on their longevity with the company, including many dating back to Norwalk’s original ownership under the Gerkin family.
Hipple noted the plan is a competitive advantage in a tight labor market.
“This also sets the company up for the next four decades since (the ESOP) is a great incentive to attract workers to the company,” Hipple said. “This helps retain employees. We’ve hired 25 this year, and we’re looking for more.”
"furniture" - Google News
August 19, 2021 at 11:04PM
https://ift.tt/3k5fL84
Norwalk will transition to employee ownership - Furniture Today
"furniture" - Google News
https://ift.tt/2YLhHcA
No comments:
Post a Comment