How Employee Ownership Benefits Executives, Companies, and Employees

February 10, 2012


by Terry McGonegle, Wright Tree Service CFO

Terry McGonegle, chief financial officer of Wright Tree Service, wrote an opinion editorial for The Des Moines Register that discussed the benefits of ESOPs and the positives that Wright Tree Service has seen from being an ESOP since 2002. Terry’s comments were also incorporated into an article for the American Management Association, and that article can be found .

Wright Tree Service is pleased to see that Iowa lawmakers are considering a bill to encourage the creation of Employee Stock Ownership Plans (ESOPs) in Iowa, because we know firsthand how beneficial ESOPs are for our state.

September 2012 marked the tenth anniversary of our ESOP. For the first 70 years of its existence, Wright Tree Service was owned by the Wright family. In 2002, when a transition plan became necessary, research was done and the decision was made to sell the company to the employees through an ESOP.

Looking back, the benefits our ESOP brought are clear. Without the ESOP, our company would likely have been sold to a third party, who would have moved jobs out of the state. By selling to the employees, the Wright family kept an Iowa founded company in Iowa. Since 2001, we’ve doubled our work force and protected more than $4 million in stable payroll in our state. In addition, we’ve noticed our employees take great pride in the company. Their decisions consistently reflect awareness of their ownership and stake in the success of the company. This has helped to promote a very positive organizational culture for our company: one that we believe is unique to an employee owned company.

With so many benefits to ESOPs, it may be difficult to understand why legislation is necessary to encourage their creation. However, the simple truth is that in today’s credit environment, many banks are not willing to finance 100 percent of the ESOP transaction, so owners have to bear some of the debt. The new legislation would exempt business owners from capital gains tax, an important incentive that in my opinion would make ESOPs a more viable option for many business owners. In addition, the proposed new bill would create a $1 million dollar fund to help defray some of the ESOP setup costs.

We know from what ESOP companies contribute to our surrounding communities in payroll and taxes that this legislation will more than pay for itself as it stimulates economic growth in the state.

Wright Tree Service became employee owned because we cared about our employees, the company, our communities and the state of Iowa. We don’t want to see how harmful it could be for our community if a locally owned business or their profits were moved out of state. It is critical that we retain all the jobs and businesses we can.

We appeal to Iowa lawmakers to support the new legislation and help our state to keep our home grown businesses where they belong.