At the 25th annual meeting of the Woodruff Sweitzer company, workers heard about a company name change, a new logo and new branding efforts, but it was the next news nugget that caused them to stand up and cheer.
“At the very end, I announced that we were forming an ESOP,” said Terry Woodruff, founder and CEO of the marketing and communications company based in Kansas City that also has offices in Minneapolis-St. Paul and Columbia, Mo.
About 75 people will become employee owners under the new employee stock ownership plan, which took Woodruff about 18 months to pull together, given all the financial and legal details that needed to be worked out.
“We didn’t take this lightly,” Woodruff said of the decision to make the company 100 percent employee-owned. “But I feel that we’ve put together the best staff, and I wanted to reward them as well as give them a true sense of ownership.”
ESOP companies routinely tout the benefits of “making employees think like owners.” They say ESOPs are motivators because they help reinforce the notion that everyone contributes to the bottom line. They allow employees to share in the profits. And advocates say ESOPs help attract and retain employees.
The agency — renamed from Woodruff Sweitzer to just Woodruff — grosses $18 million to $20 million a year. Woodruff declined to say what their new ownership stakes mean to employee pocketbooks.
But he’s fine with sharing encouragement and advice for other small- and midsized-business owners who are contemplating similar ownership changes: “Consult with a number of businesses that are ESOPs, talk to several attorneys who specialize in ESOP creation, take your time.”
At Woodruff, employees must work at the company for at least a year before they can participate. When they’re eligible, the company uses “cliff vesting” — some of employees’ eligible shares are turned over to them after three years, and their rights become fully vested after five years.
After vesting, “you can retain the shares or sell them back after you leave the company,” said Woodruff, who is continuing as president and CEO.
In the competitive marketing and communications industry, Woodruff said his firm has earned a specialty reputation in the animal health and agricultural sectors, sports marketing and finance. To maintain expertise in those fields, he said, the company recruits from throughout the United States and Canada.
In fact, the company has Canadian offices in Calgary. Because of differences in U.S. and Canadian law, the firm couldn’t implement the ESOP in Calgary. Partly to maintain the distinction in corporate organization, the company’s Canadian operation has been renamed WS.
For the record, the Sweitzer part of the name came from Steve Sweitzer, a creative director Woodruff hired about 10 years after he founded the company in Columbia. Sweitzer retired two years ago.