An architecture and engineering firm in Rogers has developed an employee stock ownership plan, becoming the third Arkansas company to do so.
Crafton Tull said Tuesday that it sold the company's stock to its employees as a way to preserve local ownership and strengthen the firm's workforce.
"We knew that at some point we would have to transfer the ownership to a new generation and have done so," Matt Crafton, president and chief executive officer, said in a phone interview.
As of Monday, Crafton Tull is 100% owned by its workers through an employee stock ownership plan, he said.
Crafton Tull was founded by Bob Crafton and Lem Tull in 1963 and, today, does business with clients across the nation through its nine offices in Arkansas and Oklahoma. They employ 250 people and offer architecture, engineering, surveying, landscape architecture and planning services.
In a statement, Jim Tull, chief financial officer, said they really needed a transition plan that works for everyone, from the owners and staff to the communities and clients they serve.
An employee stock ownership plan is a retirement plan that requires workers to invest primarily in the shares of their employer. Crafton Tull said employees will receive shares of company stock over time and will earn the cash value of those shares after they retire or leave the company.
Companies often implement these plans as a mechanism for succession planning, said Alan Ellstrand, associate dean of the Walton College of Business at the University of Arkansas.
Ellstrand, a former Internal Revenue Service worker, said it's a way for current leadership to retain control of the corporation while it passes things along to the next generation. There are also tax benefits in shifting to these plans, and they are becoming much more common, he said.
After Congress first approved employee stock ownership plans in 1974, there were about 250,000 participants in 1,500 employee stock ownership plans the next year. Today, there are more than 14 million participants in more than 6,500 of the plans, according to the Employee Stock Ownership Plan Association, an advocacy group focused on retirement savings and based in Washington, D.C.
In Arkansas, there are more than 4,130 participants representing more than 20 companies with these types of plans. Of those, three have headquarters in the state that are fully owned by employees through an employee stock ownership plan: Harps Foods, Central States Manufacturing and Crafton Tull.
Crafton Tull said it funded the ownership transition with corporate earnings.
The firm generates about $35 million in annual revenue.
In addition, Crafton clarified that none of the current leadership is planning to depart anytime soon.
"This is not an exit plan by any means," Crafton said.
Business on 09/04/2019