Thursday, December 13, 2012

Left Side of the Aisle #86 - Part 2

Hero Award #2: Joe Lueken

Joe Lueken of Bemidji, Minnesota, owns a small chain of three grocery stores. After 46 years in the business, Lueken, now 70, he has Parkinson's, so he is retiring to spend his time traveling the world with his wife. His sons were not interested in taking over the business and he had been presented with offers from large national chains to purchase his stores. So he decided to do what any decent retiring owner of a successful business would do: He is giving the business to his employees - giving as in it will cost those employees nothing. (Notice I said "decent" retiring owner, not "typical" retiring owner.)

“My employees are largely responsible for any success I've had, and they deserve to get some of the benefits of that," Lueken said. "You can't always take. You also have to give back."

The method chosen is an ESOP, an Employee Stock Ownership Plan. Such plans provide employees an ownership stake in the business: They own stock in it. The amount of shares each employee will receive in this case will be based on length of service and salary. The program is expected to pay the Lueken family off for the sale in three to five years.

ESOPs were popular for a time in the '70s - I was among the proponents - until the bosses started perverting them by setting them up and funding them with "loans" from employee pension funds: In essence, they were looting the employees' pensions in order to support the company's current stock price. One real difference here is that here, the employees are not among the stockholders, they are the stockholders. The employees own the company outright, or rather will when the transfer is complete. What's more, the fund is required to buy back the shares of any employee who leaves or retires - which means that it is always the current employees who hold the stock.

One of Lueken's sons said "We could have hired a gunslinger from Minneapolis, but that didn't sit well because the reward wouldn't go to the proper people." It's disturbing and revealing that getting the rewards to "the proper people" - the ordinary workers that Lueken said were largely responsible for his success - is so unusual. Even so, it is worth recognition when it does happen.

Joe Lueken - you are a hero.


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