Vermont Employee Ownership Center
2016 Report to the Community
January 17, 2017
Our mission: “to promote and foster employee ownership in order to broaden capital ownership, deepen employee participation, retain jobs, increase living standards for working families, and stabilize communities.”
1. New employee-owned companies in 2016
Two companies became employee-owned through an Employee Stock Ownership Plan (ESOP):
- Heritage Aviation (based in South Burlington, with 60 employees at the time of the transaction in early January).
- Stone Environmental (based in Montpelier, with 39 employees – also in early January).
Three companies became worker cooperatives:
- TimberHomes Vermont (based in Vershire, with three member/owners and three employees) became a worker co-op by adopting a new operating agreement and offering ownership to employees who meet their eligibility criteria.
- Otis Mountain Get-Down (based in Elizabethtown, New York, with 15 part-time members) was formed by group of Champlain College graduates who present an annual music festival. The VEOC provided introductory info and referrals. The company is technically based in New York, but most of the members live in Vermont.
- Burlington Herb Clinic (based in Burlington, with four founding members).
We’ll also mention, though it belongs in next year’s report, that Phoenix Feeds in New Haven is the most recent Vermont company to implement an ESOP, effective January 1, 2017.
2. Outreach and education
Conference. The fourteenth annual Vermont Employee Ownership Conference was held at Champlain College on June 2, 2016. It featured 15 workshops, a keynote by Cindy Turcot, COO of Gardener’s Supply Company and Chair of The ESOP Association, and an afternoon plenary on how employee-owned companies encourage innovation. Attendance (174 people, with 185 registered) was close to capacity, and we will be offering the 2017 conference at a larger venue, the Davis Center at UVM.
Seminars. We presented our seminar on ownership succession planning in five towns around the state, co-sponsored by the state’s Regional Development Corporations and the Vermont Small Business Development Center. A total of 67 people attended the series, most of them business owners. Selling to employees is presented in the seminar as one of four common exit paths, and some owners who might not have attended a seminar that was exclusively on this topic have found themselves receptive to the idea. Beyond this, the seminar is intended to help owners begin to make a plan for continuing their businesses after their departure – an outcome that benefits Vermont communities, regardless of whether employee ownership is the chosen path. Also last year, we offered a “technical introduction to employee ownership” for business advisors. This event was attended by only seven people, but we know that this is a key audience for us to reach and plan to offer this seminar again – next time with pre-approved continuing education credits, if possible.
3. Assistance to companies considering employee ownership
Key to the VEOC’s goal of bringing more employee ownership to Vermont is providing assistance to company owners and leaders as they explore the possibilities. The time span from initial exploration of employee ownership to implementation is often many years. In 2016, we had initial contact with representatives of 20 companies. Of those, 12 remain on our list of active cases, joining 39 cases from previous years. Of the seven cases we consider to be “hot prospects,” three are most interested in an ESOP and four in the worker co-op structure.
4. Technical assistance
When an Employee Stock Ownership Plan (ESOP) seems to be the best possibility for a company, the VEOC researches questions that arise and makes referrals, but does not offer direct technical assistance with implementation of these highly-regulated and complex structures. When a worker cooperative is being formed, however, we do sometimes help carry the project further. In 2016, we provided technical assistance to a company that seemed to be on the path to becoming a worker co-op, but ended up being sold to just one employee. We began a new co-op conversion project with a company that appears to be an excellent candidate. In both cases, we received modest fee income.
5. Financial report (for VEOC’s fiscal year, ending September 30, 2016)
The VEOC is a lean operation, and keeps its operating costs low by having staff members work out of their home offices, and by partnering with employee-owned companies and economic development partner organizations to host many of our outreach events and meetings with clients.
Revenue sources. Our largest source of revenue in FY16 was a grant from the State of Vermont’s Agency of Commerce and Community Development ($69,660 or 48% of our total income of $144,156). Sponsorships from employee-owned companies and professionals specializing in employee ownership were our second largest income source ($49,500 or 34%). The remainder came from event registration fees, donations, consulting fee income and a one-time grant of $10,000 from the Democracy At Work Institute for our participation in their worker co-op conversion collaborative project.
Expenses. Personnel costs were our largest expense ($69,448 or 69% of total expenses of $101,180). Other major expenses were for events ($19,020 or 19%) and general operations ($10,117 or 10%).