7 ms·

On 81st birthday, Oregon man gives company to employees (2010)

265 points by cfontes 14y ago

deleted 6y ago
[deleted]
cyphersanctus 14y ago
Beautiful.
jacquesm 14y ago
That's a really neat birthday present! Awesome.
decode 14y ago
This reminds me of a similar story told by E.F. Schumacher in his 1979 book "Good Work." Quoting from the chapter "A viable future visible in the present": The second link of my little chain is this company called Scott Bader, a plastics company founded by Ernest Bader, a Swiss Quaker immigrant to England before the First World War. He's now about eighty-five. Ernest Bader was penniless when he started in England. He said, All my life I will have to work for others. What a dreadful system. Well, it didn't work out like that. He was an entrepreneur and he had a business and in 1951 he suddenly woke up and said, I am now doing to all these people what I suffered from when it was done to me. I am not going to go out of this life with this feeling. No, I must do something. So he got in touch with various people, including myself, and said, I want to put this on a basis that I as a Quaker and a pacifist believe in. I don't believe in what I am doing. And so we worked very hard and hammered out a constitution for this firm. Ernest Bader said, No, I don't want to have ownership of this company, and so all the capital, except 10 percent, was vested in the commonwealth, which was set up for this purpose as a limited company. The equity doesn't lie anymore with Ernest Bader, it lies with that commonwealth, and everybody who works for a certain length of time becomes a member of the commonwealth. Legally speaking, the commonwealth is the owner of the operating company. At first the family retained 10 percent founder's share, so arranged that they had a majority, not with the intention of using it but as a last resort. Because it is jolly difficult to build something up but it is very easy to ruin it. [...] It was not until 1963, that is, twelve years later, that we felt it worked. The founder's shares were also put into the general pocket of the commonwealth, so it is the administration of the commonwealth that owns the thing. Schumacher goes on to describe how this created a radical realignment of incentives for the company and to list some of the effects created by this realignment. For example, they put a cap on the maximum spread between the highest paid and lowest paid employees, committed to staying small (spinning off new companies when they needed to grow), and required that a significant portion of all profits be invested in the local community. Scott Bader still exists and is still owned and run by the employees: http://www.scottbader.com/governance.html http://www.scottbader.com/governance.html
- peteretep 14y ago
  And there are significantly larger examples too: http://en.wikipedia.org/wiki/John_Lewis_Partnership http://en.wikipedia.org/wiki/John_Lewis_Partnership
  - SonicSoul 14y ago
    yaikes "The company is owned by a trust on behalf of all its employees — known as partners - who have a say in the running of the business and receive a share of annual profits" i hope every business decision does not need to be put to a vote by entire staff.
    - mjn 14y ago
      They use a system of representative democracy to keep it from being too unwieldy: http://www.johnlewispartnership.co.uk/about/the-partnership/governing-authorities/partnership-council.html http://www.johnlewispartnership.co.uk/about/the-partnership/... Not that much different from how things work in public corporations. Every shareholder has a say in the running of a business, but AMD does not check with me for every single decision they make, even though I own a share of the company. Except in this case, the shareholders and the employees are identical sets.
      - walshemj 14y ago
        That's the way most coops work coop by ownership not coop by management except for major decisions where everyone one get their say. I once chaired a share holders meeting of a coop and had to ask the founder to stop speaking as he had all ready spoken on the substantive motion and other junior members wanted to speak. Thank goodness for Citrine (The Uk equivalent to Roberts Rules of Debate)
  - avivo 14y ago
    A related cool example - worker owned from the start, 90k employees: http://en.wikipedia.org/wiki/Mondragon_Corporation http://en.wikipedia.org/wiki/Mondragon_Corporation
refurb 14y ago
Not to sound like a cynic here, but: http://www2.gtlaw.com/pub/alerts/2003/kahnj_03.asp http://www2.gtlaw.com/pub/alerts/2003/kahnj_03.asp What Are the Tax Advantages of an ESOP to the Shareholder? If the corporation is a C corporation and the shareholder sells 30% percent or more of his or her stock, the owner can defer indefinitely the taxation of his or her gains on the sale of the stock. The additional liquidity for the shareholder presents vast investment opportunities and increases his or her estate and charitable planning options.
- bryanlarsen 14y ago
  He's giving away the stock, so the gains are 0. There's no tax to be deferred.
  - refurb 14y ago
    Not correct. Even if you are _giving_ the stock to the employees, there are significant tax advantages. "Uses for ESOPs: To buy the shares of a departing owner: Owners of privately held companies can use an ESOP to create a ready market for their shares. Under this approach, the company can make tax-deductible cash contributions to the ESOP to buy out an owner's shares, or it can have the ESOP borrow money to buy the shares (see below)."[1] [1]https://www.nceo.org/articles/esop-employee-stock-ownership-plan https://www.nceo.org/articles/esop-employee-stock-ownership-...
    - BCM43 14y ago
      Isn't that still about buying?
      - refurb 14y ago
        The article is light on details, but one way you can "give" ownership to your employees but still get paid for it is for the company to borrow money to purchase the shares for the employees. That had the added advantage that both the interest AND the principal on the loan are tax deductible.
n_coats 14y ago
Sounds like a great guy and boss! Bravo!
robodale 14y ago
This is awesome. I buy his grains all the time.
- chiph 14y ago
  Their steel-cut oats make excellent oatmeal. I'm not surprised they won the competition.
  - abrowne 14y ago
    I eat their Scottish oatmeal nearly every morning. I get 12 lbs delivered every 3 months. Love it!
Beltiras 14y ago
I've used his product which I would rate as phenomenally good. Especially their Guar Gum.
neilkelty 14y ago
Reminds me of Chuck Feeney - who made billions and then gave it all away/set up a foundation, including giving $26 million to long term employees. Great book on him called `The Billionaire Who Wasn't`
- GFischer 14y ago
  Had to look it up, found it on Bill Gates' site :) http://www.thegatesnotes.com/Personal/Chuck-Feeney-The-Billionaire-Trying-to-Go-Broke http://www.thegatesnotes.com/Personal/Chuck-Feeney-The-Billi...
- inovica 14y ago
  I agree. This was an 'accidental' book for me and whilst I'm sure that the story told was a little biased the ultimate message was very good. Recommend it to anyone who is interested in business. What I like is that this is also a book about building something huge, from an idea. Many times on HN its about someone who's created something that brings in a few hundred or a few thousand dollars a month. Its good to read about people who really build large businesses, employing a lot of people
Akharin 14y ago
The article is from 2010...
patja 14y ago
It is a great story but it happened almost 3 years ago.
shaaaaawn 14y ago
This is amazing
sdfasdfa 14y ago
This is so unamerican. Giving stuff away for free is really bad. Teach a man to fish instead. Or rather, the man should be trying to learn to fish. It just feels so bad. Like spoiling a child. If you really want to help somebody you must really make them work for it with blood and sweat. Otherwise they will not appreciate it. And they will teach their children (sub-consciously) to just wait for the next billionaire to give them something.
- logn 14y ago
  He's giving it to his employees who presumably have worked for it with "blood and sweat". An alternative would be passing it down through inheritance or selling to a bidder, neither of whom invest blood or sweat. So, to your point, he's doing exactly what you say he should
  - sdfasdfa 14y ago
    >>He's giving it to his employees who presumably have worked for it with "blood and sweat" No they didn't. They were getting paid already for the value they provided to the company. Do not delude yourself, this is nothing more than a handout. >>An alternative would be passing it down through inheritance or selling to a bidder, neither of whom invest blood or sweat. So you are OK with some employees receiving a gift and you oppose the heirs receiving that same gift. Of course I'm opposed to just giving stuff away, but if you have to then leaving it to your heirs makes more sense from an evolutionary point of view. Another option, if you really want to give away your money, is to create jobs for people with nothing to do. This way they will earn that money instead of just receiving a gift. For example, fund public works and pay people who you want to help to do that job. Pay them reasonably even. Maybe even include education benefits. Isn't this a better option than just handing somebody free money? If those people do not want to do these jobs then they do not deserve the money. I'm really curious why would anybody disagree with me. Of course, there are always exceptions. There are people in the world that truly need free money. Example orphans, the elderly, disabled people. People who even if they wanted to work they simply can't. My logic is undeniable, how can you oppose anything I say? At the end of the day though we are all free to do with our money what we want. Still, I cannot help but hurt when I see money just being wasted away by giving it to people who have not earned it (heirs excluded of course). Edit: Thanks for answering. I really do believe I'm right so it is nice to have somebody explain why that may not be so instead of just getting down voted (which I don't mind). If more people could try explaining why they disagree with me that'd be great. I really want to hear why anybody thinks I'm wrong. Maybe I am wrong. I'm willing to change my mind if there is a good reason.
gnosis 14y ago
All companies should be employee-owned.
- brianobush 14y ago
  How would they gain access to capital? Even though our markets have/had issues, they do enable somewhat ready access to cash - of course, if the company has traction in the market, revenue, etc.
  - walshemj 14y ago
    That is the killer Q for coops access to capital with out giving up control and so no being a coop any more.
- dreamdu5t 14y ago
  How about: People should be able to trade freely. People should be free to associate. If people want to form cooperatives then they should be free to do so.
- brc 14y ago
  Wrong. Anyone forming a business should be free to own it themselves, invite employee ownership, donate the entire thing to their dog, invite the government to nationalise it - in short, anyone who creates a company should be free to dispose and rearrange the ownership as they see fit. Within this spectrum there will be optimal, sub-optimal, and plainly idiotic arrangements. And that's the way things should be. As soon as you start using language like 'should' or 'must' then you imply regulatory impositions, which will always create a set of winners and losers, but more importantly, erect a wall making it that much more difficult for the losers to get back into the winners column
  - psb217 14y ago
    The difference between "should" and "must" is significant. If I said: "people should not be hypocrites" and "people should be free to say what they want", my statements would not be incompatible or contradictory. In the same way, simultaneously holding the beliefs "companies should be employee owned" and "anyone forming a business should be free to own it themselves" is possible without cognitive dissonance.
prbuckley 14y ago
I have actually recently been doing a lot of research on ESOPS. Back in the 90's congress passed a law that makes it possible for a company that is 100% owned by an ESOP to pay ZERO corporate income tax! If you have a startup that is cashflow positive and generating taxable income you should look into this. I am still leraning a lot about it myself. This link was useful (I have no affiliation with the law firm, just thought they did a good job describing the details)... http://www.seethebenefits.com/showarticle.aspx?Show=687 http://www.seethebenefits.com/showarticle.aspx?Show=687
fuzzythinker 14y ago
How are shares allotted to new employees? Do existing shares get diluted?

265 points by cfontes 14y ago

deleted 6y ago

[deleted]

cyphersanctus 14y ago

Beautiful.

jacquesm 14y ago

That's a really neat birthday present! Awesome.

decode 14y ago

This reminds me of a similar story told by E.F. Schumacher in his 1979 book "Good Work." Quoting from the chapter "A viable future visible in the present": The second link of my little chain is this company called Scott Bader, a plastics company founded by Ernest Bader, a Swiss Quaker immigrant to England before the First World War. He's now about eighty-five. Ernest Bader was penniless when he started in England. He said, All my life I will have to work for others. What a dreadful system. Well, it didn't work out like that. He was an entrepreneur and he had a business and in 1951 he suddenly woke up and said, I am now doing to all these people what I suffered from when it was done to me. I am not going to go out of this life with this feeling. No, I must do something. So he got in touch with various people, including myself, and said, I want to put this on a basis that I as a Quaker and a pacifist believe in. I don't believe in what I am doing. And so we worked very hard and hammered out a constitution for this firm. Ernest Bader said, No, I don't want to have ownership of this company, and so all the capital, except 10 percent, was vested in the commonwealth, which was set up for this purpose as a limited company. The equity doesn't lie anymore with Ernest Bader, it lies with that commonwealth, and everybody who works for a certain length of time becomes a member of the commonwealth. Legally speaking, the commonwealth is the owner of the operating company. At first the family retained 10 percent founder's share, so arranged that they had a majority, not with the intention of using it but as a last resort. Because it is jolly difficult to build something up but it is very easy to ruin it. [...] It was not until 1963, that is, twelve years later, that we felt it worked. The founder's shares were also put into the general pocket of the commonwealth, so it is the administration of the commonwealth that owns the thing. Schumacher goes on to describe how this created a radical realignment of incentives for the company and to list some of the effects created by this realignment. For example, they put a cap on the maximum spread between the highest paid and lowest paid employees, committed to staying small (spinning off new companies when they needed to grow), and required that a significant portion of all profits be invested in the local community. Scott Bader still exists and is still owned and run by the employees: http://www.scottbader.com/governance.html http://www.scottbader.com/governance.html

peteretep 14y ago
And there are significantly larger examples too: http://en.wikipedia.org/wiki/John_Lewis_Partnership http://en.wikipedia.org/wiki/John_Lewis_Partnership
- SonicSoul 14y ago
  yaikes "The company is owned by a trust on behalf of all its employees — known as partners - who have a say in the running of the business and receive a share of annual profits" i hope every business decision does not need to be put to a vote by entire staff.
  - mjn 14y ago
    They use a system of representative democracy to keep it from being too unwieldy: http://www.johnlewispartnership.co.uk/about/the-partnership/governing-authorities/partnership-council.html http://www.johnlewispartnership.co.uk/about/the-partnership/... Not that much different from how things work in public corporations. Every shareholder has a say in the running of a business, but AMD does not check with me for every single decision they make, even though I own a share of the company. Except in this case, the shareholders and the employees are identical sets.
    - walshemj 14y ago
      That's the way most coops work coop by ownership not coop by management except for major decisions where everyone one get their say. I once chaired a share holders meeting of a coop and had to ask the founder to stop speaking as he had all ready spoken on the substantive motion and other junior members wanted to speak. Thank goodness for Citrine (The Uk equivalent to Roberts Rules of Debate)
- avivo 14y ago
  A related cool example - worker owned from the start, 90k employees: http://en.wikipedia.org/wiki/Mondragon_Corporation http://en.wikipedia.org/wiki/Mondragon_Corporation

refurb 14y ago

Not to sound like a cynic here, but: http://www2.gtlaw.com/pub/alerts/2003/kahnj_03.asp http://www2.gtlaw.com/pub/alerts/2003/kahnj_03.asp What Are the Tax Advantages of an ESOP to the Shareholder? If the corporation is a C corporation and the shareholder sells 30% percent or more of his or her stock, the owner can defer indefinitely the taxation of his or her gains on the sale of the stock. The additional liquidity for the shareholder presents vast investment opportunities and increases his or her estate and charitable planning options.

bryanlarsen 14y ago
He's giving away the stock, so the gains are 0. There's no tax to be deferred.
- refurb 14y ago
  Not correct. Even if you are _giving_ the stock to the employees, there are significant tax advantages. "Uses for ESOPs: To buy the shares of a departing owner: Owners of privately held companies can use an ESOP to create a ready market for their shares. Under this approach, the company can make tax-deductible cash contributions to the ESOP to buy out an owner's shares, or it can have the ESOP borrow money to buy the shares (see below)."[1] [1]https://www.nceo.org/articles/esop-employee-stock-ownership-plan https://www.nceo.org/articles/esop-employee-stock-ownership-...
  - BCM43 14y ago
    Isn't that still about buying?
    - refurb 14y ago
      The article is light on details, but one way you can "give" ownership to your employees but still get paid for it is for the company to borrow money to purchase the shares for the employees. That had the added advantage that both the interest AND the principal on the loan are tax deductible.

n_coats 14y ago

Sounds like a great guy and boss! Bravo!

robodale 14y ago

This is awesome. I buy his grains all the time.

chiph 14y ago
Their steel-cut oats make excellent oatmeal. I'm not surprised they won the competition.
- abrowne 14y ago
  I eat their Scottish oatmeal nearly every morning. I get 12 lbs delivered every 3 months. Love it!

Beltiras 14y ago

I've used his product which I would rate as phenomenally good. Especially their Guar Gum.

neilkelty 14y ago

Reminds me of Chuck Feeney - who made billions and then gave it all away/set up a foundation, including giving $26 million to long term employees. Great book on him called `The Billionaire Who Wasn't`

GFischer 14y ago
Had to look it up, found it on Bill Gates' site :) http://www.thegatesnotes.com/Personal/Chuck-Feeney-The-Billionaire-Trying-to-Go-Broke http://www.thegatesnotes.com/Personal/Chuck-Feeney-The-Billi...
inovica 14y ago
I agree. This was an 'accidental' book for me and whilst I'm sure that the story told was a little biased the ultimate message was very good. Recommend it to anyone who is interested in business. What I like is that this is also a book about building something huge, from an idea. Many times on HN its about someone who's created something that brings in a few hundred or a few thousand dollars a month. Its good to read about people who really build large businesses, employing a lot of people

Akharin 14y ago

The article is from 2010...

patja 14y ago

It is a great story but it happened almost 3 years ago.

shaaaaawn 14y ago

This is amazing

sdfasdfa 14y ago

This is so unamerican. Giving stuff away for free is really bad. Teach a man to fish instead. Or rather, the man should be trying to learn to fish. It just feels so bad. Like spoiling a child. If you really want to help somebody you must really make them work for it with blood and sweat. Otherwise they will not appreciate it. And they will teach their children (sub-consciously) to just wait for the next billionaire to give them something.

logn 14y ago
He's giving it to his employees who presumably have worked for it with "blood and sweat". An alternative would be passing it down through inheritance or selling to a bidder, neither of whom invest blood or sweat. So, to your point, he's doing exactly what you say he should
- sdfasdfa 14y ago
  >>He's giving it to his employees who presumably have worked for it with "blood and sweat" No they didn't. They were getting paid already for the value they provided to the company. Do not delude yourself, this is nothing more than a handout. >>An alternative would be passing it down through inheritance or selling to a bidder, neither of whom invest blood or sweat. So you are OK with some employees receiving a gift and you oppose the heirs receiving that same gift. Of course I'm opposed to just giving stuff away, but if you have to then leaving it to your heirs makes more sense from an evolutionary point of view. Another option, if you really want to give away your money, is to create jobs for people with nothing to do. This way they will earn that money instead of just receiving a gift. For example, fund public works and pay people who you want to help to do that job. Pay them reasonably even. Maybe even include education benefits. Isn't this a better option than just handing somebody free money? If those people do not want to do these jobs then they do not deserve the money. I'm really curious why would anybody disagree with me. Of course, there are always exceptions. There are people in the world that truly need free money. Example orphans, the elderly, disabled people. People who even if they wanted to work they simply can't. My logic is undeniable, how can you oppose anything I say? At the end of the day though we are all free to do with our money what we want. Still, I cannot help but hurt when I see money just being wasted away by giving it to people who have not earned it (heirs excluded of course). Edit: Thanks for answering. I really do believe I'm right so it is nice to have somebody explain why that may not be so instead of just getting down voted (which I don't mind). If more people could try explaining why they disagree with me that'd be great. I really want to hear why anybody thinks I'm wrong. Maybe I am wrong. I'm willing to change my mind if there is a good reason.

gnosis 14y ago

All companies should be employee-owned.

brianobush 14y ago
How would they gain access to capital? Even though our markets have/had issues, they do enable somewhat ready access to cash - of course, if the company has traction in the market, revenue, etc.
- walshemj 14y ago
  That is the killer Q for coops access to capital with out giving up control and so no being a coop any more.
dreamdu5t 14y ago
How about: People should be able to trade freely. People should be free to associate. If people want to form cooperatives then they should be free to do so.
brc 14y ago
Wrong. Anyone forming a business should be free to own it themselves, invite employee ownership, donate the entire thing to their dog, invite the government to nationalise it - in short, anyone who creates a company should be free to dispose and rearrange the ownership as they see fit. Within this spectrum there will be optimal, sub-optimal, and plainly idiotic arrangements. And that's the way things should be. As soon as you start using language like 'should' or 'must' then you imply regulatory impositions, which will always create a set of winners and losers, but more importantly, erect a wall making it that much more difficult for the losers to get back into the winners column
- psb217 14y ago
  The difference between "should" and "must" is significant. If I said: "people should not be hypocrites" and "people should be free to say what they want", my statements would not be incompatible or contradictory. In the same way, simultaneously holding the beliefs "companies should be employee owned" and "anyone forming a business should be free to own it themselves" is possible without cognitive dissonance.

prbuckley 14y ago

I have actually recently been doing a lot of research on ESOPS. Back in the 90's congress passed a law that makes it possible for a company that is 100% owned by an ESOP to pay ZERO corporate income tax! If you have a startup that is cashflow positive and generating taxable income you should look into this. I am still leraning a lot about it myself. This link was useful (I have no affiliation with the law firm, just thought they did a good job describing the details)... http://www.seethebenefits.com/showarticle.aspx?Show=687 http://www.seethebenefits.com/showarticle.aspx?Show=687

fuzzythinker 14y ago

How are shares allotted to new employees? Do existing shares get diluted?