Todd Moreland says he wanted to be an electrician since he was 16 years old at Ooltewah High School, following in the footsteps of both his father and grandfather. Starting 40 years ago as a teenager at Adman Electric, Moreland started making coffee, getting doughnuts, working in a warehouse and driving a truck before getting his electricians license through the IBEW union and later becoming an estimator and project manager.
Moreland also knew early he wanted to run the company and after the tragic death of his father, the younger Moreland negotiated to buy the company in 1996 with borrowed money when he was only 33 years old. At the time, Adman Electric had about 18 to 20 employees and $2.8 million in revenues. But under Moreland’s leadership over the past three decades, the Chattanooga electrical contractor has grown to more than $50 million in annual revenues with about 300 employees.
By developing relationships with many general contractors — often on the the Honors golf course in Ooltewah where Moreland is an frequent player — Moreland built Adman into one of Chattanooga’s biggest electrical service businesses, operating in five Southeastern states. “We are known for delivering quality projects on time – we’ve never missed a schedule – and on budget,” Moreland said, citing the company motto that “reputation is everything. We have successfully completed hundreds of commercial, industrial and large residential projects,” he said.
But after spending his career building up Adman Electric, then 55-year-old Moreland said a couple of years ago he began thinking of how he could realize the value of the company while still protecting and helping what he affectionately calls “my guys” — the employees who Moreland credits with most of the success of Adman. “The last time I checked they were doing all the work on a daily basis,” Moreland said. So rather than sell Adman Electric to another rival business likely to cut staff or potentially undermine the company’s record of success, Moreland looked for another way.
Moreland had observed other building and contracting firms sold to rival companies or outside investors and invariably the selling companies soon ended up with new management teams, displacing those previously with the company, or they were unable to sustain the business and cut staff and operation. “I didn’t want that to happen at Adman, and I’m certainly not looking to retire or have my guys hurt,” he said.
While considering his alternatives, Moreland said he saw a successful employee-owned model while working at Erlanger hospital on a project with McCarthy Building Company, the St. Louis-based construction firm that has been owned under an Employee Stock Ownership Plan (ESOP) since 1996.
Moreland, a self-taught businessman, began reading about ESOPs, including the best-selling book by Upendra Chivukula, a New Jersey assemblyman and Democrat, and Veny Musum, a Republican businessman. In their book The 3rd Way, Chivukula and Musum contend that a solution to America’s growing income inequality is to make the economy more inclusive by expanding the private ownership of businesses, including more employee stock ownership plans.
The book helped shape Moreland’s thinking. “The crux of the book is that capitalism works, but it isn’t fair and socialism is fair, but it just doesn’t work,” Moreland. “So what about a third way?” Moreland sees the ESOP as a fairer and better way to share ownership in a company, especially a successful business like Adman which has enjoyed an increase in value over time.
Moreland likens the creation of the ESOP to a very valuable 401(k) plan in distributing the equity in the company to employees over time based upon a worker’s compensation. The vesting rights at Adman occur over a 6-year period of employment for new workers, although most of workers at the time of the ESOP sale in August 2017 were fully vested based upon their prior work. The company borrowed a third of the calculated value of the business last year for an initial payment to Moreland , who will receive the rest over the next 10 years.
Moreland remains as CEO, but he is an employee and only a partial owner, just like the other workers in the business. “It keeps the employees engaged and wanting to stay with the company and helps us to grow and succeed,” said Ricky Etherton, the company’s chief financial officer for Adman. “We are all owners of this company.”