Montgomery County Community College: Panel Discussion Highlights The Positive Impact Of ESOPs

Press release from the Montgomery County Community College:

Diane VanDyke

May 19, 2021

Although employee stock ownership plans (ESOPs) have existed since 1974, many people
are not aware of their many benefits for both businesses and employees. Montgomery
County Community College (MCCC) recently held the first of a series of ongoing conversations
about ESOPs and its new Baker Center of Excellence for Employee Ownership and Business Transformation to share this beneficial
information with the community.

The online panel discussion, “How ESOPs Can Unlock Success for Your Business and Transform
Our Community,” featured several guest speakers who shared their expertise and perspectives
on ESOPs:

MCCC Dean of Workforce and Economic Development Kyle Longacre served as the facilitator,
and Dr. Victoria L. Bastecki-Perez, MCCC President, and Rep. Napoleon Nelson, MCCC
Trustee, shared welcoming remarks.

Baker started the discussion by describing why NewAge Industries became an ESOP approximately
15 years ago.

“I have always wanted to have a high-performance company, and I thought if I didn’t
give ownership to the employees, I wouldn’t get a high-performance company because
there is a difference between an employee and employee-owner,” he said. “We’ve been
an ESOP for 15 years and it’s been very successful.”

Baker, a longtime advocate of MCCC and its mission, donated $3 million to MCCC for
the creation of the Baker Center of Excellence, which will assist employers and employees in the region by providing
educational programs and resources to support ESOPs and other dynamic employer-employee
partnerships through programs, workshops and events. The Baker Center of Excellence
also will include a resource library and a certificate program to advance employee
skills and leadership.

As the discussion continued, Renenger explained why the Montgomery County region is
a good business landscape for ESOPs.

“Montgomery County has an interesting confluence of very successful businesses with
deep roots in the community, and they have a desire to benefit the community as a
whole,” he said. “There is the idea to keep jobs local and give back to the community,
and ESOPs are very good at that when you look at them statistically.”

He further explained that nationally employees of ESOPs have more retirement wealth
(up to two and a half times larger) than non-ESOP companies. He also believes Montgomery
County is poised to be a leader when it comes to employee ownership.

Baker agreed that his employees have more retirement wealth than other employees do.

“I’ll give you a statistic about the distribution of wealth. We now have 32 millionaires
working here at NewAge out of 240 employees,” he said.

Zellers said that Montgomery County’s Commerce Department always is looking for stories
of success to help retain and attract businesses to the area. He said local ownership
and generation-to-generation businesses make “a powerful narrative for the area.”

He added that communities over time tend to identify with the businesses in their
communities, developing an intrinsic link, and these kinds of structures only add
weight to that connection and “allow for longer-term generational wealth, the kind
of things that really do transform and build communities over time.”

From an employee perspective, Smith spoke about how he looked for a company where
he could make a long-term commitment for employment and plan for retirement. IT Landis
provides that for him through employee ownership.

At MCCC, the concept of ESOPs is included in business classes, Johnson said, because
MCCC supports entrepreneurship, business growth and innovation. Johnson said Baker
regularly visits his marketing classes and speaks about the concept of ESOPs. For
their courses, students create marketing plans to promote the benefits of ESOPs for
business plans.

The Baker Center, Longacre said, will help to take these conversations to the next
level in the community and will serve as a hub of expertise for businesses.

“What I hope is that we can educate a lot of selling shareholders, like myself, as
well as employees of companies about the benefits and the structure and rules of ESOPs,
and we can create a lot more of these in Montgomery County and Pennsylvania,” Baker
said. “I think it is absolutely the best business model out there; there really is
no other business model which has all the benefits and features that ESOPs have.”

The biggest challenge for ESOPs, said Renenger, is awareness and getting people to
understand the opportunities with this business model. The Baker Center will help
to educate and train people about the concept and how it can promote growth for a
business, particularly now as the economy begins to recover from the effects of the
pandemic, and how it benefits employees.

“There is a sense of pride when you’re part of any stock company,” Smith said. “You
are your own reason for success or failure at an ESOP company. The company is only
going to be as successful as the owners want it to be.”

The next step for the Baker Center involves the hiring of an executive director in
the next several weeks, said Longacre.

This press release was produced by the Montgomery County Community College. The views expressed here are the author’s own.