Not long ago, Natalie Reitman-White was at a national conference on employee ownership, listening to two of her idols on stage — Full Sail Brewery’s Irene Firmat, and New Belgium Brewery’s Kim Jordan.
“I thought how amazing is this, two female CEO co-founders running beer companies, totally committed to employee-ownership culture and sustainability,” Reitman-White says.
But both of those companies are no longer employee-owned. A private equity firm acquired Full Sail in 2015, and New Belgium just recently announced it accepted an offer to be acquired by a multinational craft brewing company.
The reason isn’t unmitigated greed on the part of the co-founders or employees who benefit financially from the acquisitions — New Belgium disclosed that as a result of the acquisition and buyout of the company’s employee stock ownership plan (ESOP), more than 300 employees are each receiving over $100,000 of retirement money, with some receiving significantly greater amounts. That’s good news for workers.
The problem is structural. ESOPs are highly regulated by the Internal Revenue Service under the Employee Retirement Income Security Act (ERISA). Those regulations make it nearly impossible for companies to reject lucrative offers from outsiders when the company is majority-owned through an ESOP. Those same regulations also make it challenging to manage cash flow as older employees reach retirement and need to cash out — meaning the company has to buy back their stock.
As vice president for organizational vitality at Organically Grown Company, which was owned by a combination of the farmers in its supply chain and an ESOP, Reitman-White saw the writing on the wall in 2014.
But Organically Grown found a different path, joining a nascent but suddenly growing movement of companies that are transitioning into forms of “steward-ownership.” There’s more than one specific legal form it can take, but steward ownership is analogous to putting land into a community land trust, taking the essential asset (in this case a business) off the market for speculative investors and dedicating it to some higher purpose (in this case the transformation of the food system). Now 100 percent steward-owned, Organically Grown held its first annual stakeholder meeting last month — replacing what had been its annual shareholder meeting.