On 81st birthday, Oregon man gives company to employees (2010)
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This reminds me of a similar story told by E.F. Schumacher in his 1979 book "Good Work." Quoting from the chapter "A viable future visible in the present":
Schumacher goes on to describe how this created a radical realignment of incentives for the company and to list some of the effects created by this realignment. For example, they put a cap on the maximum spread between the highest paid and lowest paid employees, committed to staying small (spinning off new companies when they needed to grow), and required that a significant portion of all profits be invested in the local community.The second link of my little chain is this company called Scott Bader, a plastics company founded by Ernest Bader, a Swiss Quaker immigrant to England before the First World War. He's now about eighty-five. Ernest Bader was penniless when he started in England. He said, All my life I will have to work for others. What a dreadful system. Well, it didn't work out like that. He was an entrepreneur and he had a business and in 1951 he suddenly woke up and said, I am now doing to all these people what I suffered from when it was done to me. I am not going to go out of this life with this feeling. No, I must do something. So he got in touch with various people, including myself, and said, I want to put this on a basis that I as a Quaker and a pacifist believe in. I don't believe in what I am doing. And so we worked very hard and hammered out a constitution for this firm. Ernest Bader said, No, I don't want to have ownership of this company, and so all the capital, except 10 percent, was vested in the commonwealth, which was set up for this purpose as a limited company. The equity doesn't lie anymore with Ernest Bader, it lies with that commonwealth, and everybody who works for a certain length of time becomes a member of the commonwealth. Legally speaking, the commonwealth is the owner of the operating company. At first the family retained 10 percent founder's share, so arranged that they had a majority, not with the intention of using it but as a last resort. Because it is jolly difficult to build something up but it is very easy to ruin it. [...] It was not until 1963, that is, twelve years later, that we felt it worked. The founder's shares were also put into the general pocket of the commonwealth, so it is the administration of the commonwealth that owns the thing.Scott Bader still exists and is still owned and run by the employees:
I have actually recently been doing a lot of research on ESOPS. Back in the 90's congress passed a law that makes it possible for a company that is 100% owned by an ESOP to pay ZERO corporate income tax!
If you have a startup that is cashflow positive and generating taxable income you should look into this. I am still leraning a lot about it myself. This link was useful (I have no affiliation with the law firm, just thought they did a good job describing the details)...
Not to sound like a cynic here, but: http://www2.gtlaw.com/pub/alerts/2003/kahnj_03.asp
What Are the Tax Advantages of an ESOP to the Shareholder?
If the corporation is a C corporation and the shareholder sells 30% percent or more of his or her stock, the owner can defer indefinitely the taxation of his or her gains on the sale of the stock. The additional liquidity for the shareholder presents vast investment opportunities and increases his or her estate and charitable planning options.
Reminds me of Chuck Feeney - who made billions and then gave it all away/set up a foundation, including giving $26 million to long term employees.
Great book on him called `The Billionaire Who Wasn't`
All companies should be employee-owned.
The article is from 2010...
This is awesome. I buy his grains all the time.
I've used his product which I would rate as phenomenally good. Especially their Guar Gum.
That's a really neat birthday present! Awesome.
How are shares allotted to new employees? Do existing shares get diluted?
Sounds like a great guy and boss! Bravo!
This is amazing
It is a great story but it happened almost 3 years ago.
Beautiful.
This is so unamerican. Giving stuff away for free is really bad. Teach a man to fish instead. Or rather, the man should be trying to learn to fish. It just feels so bad. Like spoiling a child.
If you really want to help somebody you must really make them work for it with blood and sweat. Otherwise they will not appreciate it. And they will teach their children (sub-consciously) to just wait for the next billionaire to give them something.