Addressing a crowded room of almost 400 employees on March 3, Rick Urschel, president and chief executive officer of Urschel Laboratories, announced that the Urschel family had sold the company. The news was not met with boos and jeers, but rather with hugs and high-fives.
That’s because a few days before, shareholders sold the Chesterton, Indiana, USA-headquartered industrial food cutting and size reduction equipment manufacturing company to its employees. Over the past few weeks, they had tendered holdings in the Urschel Laboratories Employee Stock Ownership Plan (ESOP) to consummate the transaction.
An ESOP is a program in the United States designed to give employees an ownership interest in the company they work for without sustaining personal, out-of-pocket costs. Shares are allocated to employee accounts on an annual basis, and upon retirement from the company, they sell shares back to the ESOP for cash. The plan also gives employees control over future transfer of the company, making it difficult to sell or merge with another firm.
There are many reasons why a company would want to convert to an ESOP. In the case of Urschel, the uncertainty of the ability or willingness of the fifth generation to run the business prompted family members to explore options. It soon became clear that conversion to an ESOP was fair for the company, the shareholders and the employees.
“This decision was not an easy one to come by, and has been in the works for nearly a year,” said President Urschel. “I am grateful that the shareholders of the company were able to realize what an incredible benefit this would be for the employees, and what a wonderful way we can reward them for their years of dedicated service. Now, instead of the Urschel family being the stewards of the company, we have passed that obligation on to the employees. Today, we’re all part of the same family,”
On occasion, ESOP’s are used as exit strategies for owners. However, according to President Urschel, it was not so in this case.
“I’m not sure how many years my dad (Chairman Bob Urschel) has left to work, but everyone appreciates having him around. He’s a great source for institutional knowledge, and I rely on his council. As for me, I couldn’t think of anywhere else I’d rather work. I’ve grown up with a lot of these guys, and the friendships I’ve had over the years make coming to work and doing the best job I can do an easy task.”
Chairman Urschel commented: “I know it sounds trite, but we really feel our employees are our number one asset. My father always taught me that it was the family’s job to look out for the employee, and decisions should always be made with them at the forefront.”
Urschel Laboratories, established in 1910 by William Urschel, is regarded as the global leader in industrial slicing and dicing food cutting technology. With direct sales offices in Europe, Asia and South America as well as in the USA, it has built significant markets in the frozen food industry and other sectors of the food business around the world. Among its customers are the world’s leading producers of frozen vegetables, french fries, cheese and meat products. The company recently invested approximately $80 million to build a 350,000-square-foot, state-of-the-art equipment manufacturing facility in Indiana.
