Pizzagalli Construction Company Transitions to 100% Employee Ownership

Employee ownership culture embedded throughout organization

by Jennifer Higgs

With a culture of employee ownership already embedded in the organization, Pizzagalli Construction Company recently became 100 per cent employee owned.

The transition to a 100-per-cent employee stock ownership plan (ESOP) began in 2002, when the founding Pizzagalli brothers decided to transition ownership to the people who participated in the growth and success of the company.

Mike Sessions, senior vice-president, says the founders wanted to see the culture of the company remain and those who helped build it thrive.

“A lot of the employee ownership culture was already in the company,” he says, noting ideas such as everyone is a leader and makes a difference previously existed in the organization.

“The ESOP just seemed to make sense as a way to transition ownership from the founders to the employees as a way to maintain the culture of the company,” he says.

The South Burlington, Vermont-based company had already established a 30 per cent ESOP. Through a leveraged buyout, the ESOP purchased 50 per cent from the two brothers in 2007. The remaining 20 per cent of shares held by executives was also purchased, making the company 100 per cent employee owned in April 2009.

A portion of the ESOP is distributed to employees annually based on salary. Every quarter employees receive a statement showing how much is in their ESOP account and how much it has appreciated. Sessions notes many people are looking at their accounts and their ESOP is surpassing what is in their 401(k) plan, and they want to ensure it keeps increasing.

Because an ESOP gives employees an equity position in the company, the value of the stock is a direct result of the employee’s contributions and efforts, says Sessions, adding distributed leadership and decision-making has been in the company for a long time.

Sessions recalls a presentation that was made a few years ago to Pizzagalli employees that showed what would happen to the bottom line if the company saved one-third of a penny of every dollar spent on cost at work.

The result was dramatic, with approximately a 27-per-cent increase in profit. A few months later an executive saw three craft workers walking quickly across the job site. As the company focuses on safety, the executive said they should slow down, and received the response that this was how they were saving a third of a penny.

“It’s that kind of thing that has gone throughout the company, where people are more conscientious about how they save or produce a third of a penny and the decisions that they make,” says Sessions.

Pizzagalli has a very flat management structure with project managers treated like the president of a company, having the authority and responsibility to make huge financial decisions for projects that may range from $30 million to $250 million.

“These project managers hire people, fire people, and they make decisions on a day-to-day basis that affect the outcome financially and schedule and quality of their jobs,” says Sessions.

From a corporate level, the company has engaged employees in its strategic planning process.

Pizzagalli has 1,100 employees throughout the U.S. To learn more about the company, visit