- Rosendin, the $2 billion employee-owned electrical contractor headquartered in San Jose, California, announced Friday that it has selected five current officers to join its 2020 executive team in the wake of the planned retirement of three long-time company executives.
- With more than 40 years of experience in the construction industry, Mike Greenawalt will replace CEO Tom Sorley, who has spent 26 years in the role, while Paolo Degrassi will step into Larry Beltramo's position as president. Beltramo is a 44-year veteran of Rosendin. Two individuals will share the chief operating officer function, with Matt Englert named COO of the company's Western Division and Keith Douglas named COO of the Eastern Division. Justin Tinoco, as new executive vice president, will replace Jim Hawk and round out the new executive committee.
- Sorley, who will stay on in his position as chairman of the Rosendin board, said that since the three executives were planning to retire soon and at approximately the same time, the company decided to make public its succession plan and the names of the new executives in order to give it and its customers ample transition time. The early identification of the company's future leaders, Sorley said, will also allow the new team to plan and focus on its priorities moving forward.
Rosendin, with 15 branches across the U.S. said it has been 100% employee-owned since 2000.
An Employee Stock Ownership Plan (ESOP) is a way that retiring owners sometimes choose to transfer ownership to its workers as they themselves exit the company. After deciding an ESOP is the way to go, current stockholders sell all or a certain percentage of their shares to the program so that they can, in turn, be given to employees based on their wages versus total payroll. So, if a company has a total of $10 million in payroll, the individual who makes $100,000 would own 1% of the stock. Since the employee's ownership is dependent on the percentage of total payroll, if total payroll rises to $12 million, the person earning $100,000 would own a smaller portion of shares, a little less than 0.84%.
There is a set vesting period and if an employee leaves the company, even because of retirement, he or she must sell their shares back so that they can be reallocated to active employees. Employees do not buy shares but earn them through service to the company. In ESOP development, the company can specify which employees may participate. For instance, the plan can be limited to only salaried employees or officers.
This is the strategy that The Boldt Co. took as it developed its ESOP in 2015. Boldt entertained the idea of selling the company to an outsider but decided that the best way to maintain the company as a high-performing contractor and to make sure a new owner wouldn't shut down the company was to implement an ESOP.
As of 2016, there were 6,624 ESOPs managing assets of about $1.4 trillion, according to the National Center for Employee Ownership. The share of construction companies that have ESOP plans is 11%.