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Man gives company to his employees

Bob Moore, founder of Bob's Red Mill Natural Foods

TEXT OF INTERVIEW

Kai Ryssdal: If you're a frequent visitor to stores like Whole Foods, you might have seen, or even bought, products made by Bob's Red Mill Natural Foods. The purveyor of fine grains and flours is just outside Portland, Ore. And Bob Moore is the Bob in question. He just turned 81 years old. But instead of getting a gift, he gave one to his employees. He gave them the company. Earlier this week Mr. Moore announced something called an Employee Stock Ownership Plan, a retirement plan funded by company stock, which means, in essence, that his 209 employees now own Bob's Red Mill. Bob Moore, it's good to have you with us.

BOB MOORE: Thank you. It's a pleasure to be here.

Ryssdal: First of all, happy birthday, I guess, a little bit belated...

MOORE: Yeah, 81 on Monday.

Ryssdal: I hear it's a very good age.

MOORE: I guess it is. I got up that morning.

Ryssdal: That's right. Tell me about this thing you did with your company. You gave it away.

MOORE: Well, you know, you have to decide what you're going to do with a company. I started many years ago, and began accumulating some of the most wonderful people in the world. Some of them had been with me for over 30 years. You reach a certain point in your life, 81, we just said that. And you've got to decide what you're going to do. You can sell the company. We've had lots and lots of opportunities. There's just too many bad stories about what happens when going entities like our company are sold. The new owners don't always do what you think they should do, and they're not always kind to the employees. I just absolutely felt I had to come up with something that would work.

Ryssdal: So you set it up as a retirement account basically, right, for all your employees?

MOORE: Yeah, it is, actually. But you realize, too, Kai, that when this thing pays out in 10 years they're going to own the company. The current owners are paid off, and it's not theirs any longer. The ESOP is a very rigidly controlled government program that is meant to serve the purpose of a turnover in companies and that's exactly the way we're dealing with it. Myself and my partners, there's four of us altogether, felt it was the best transition we could think of. Because we're all getting older. I'm 81, John, my partner, is pushing 70, and Denny is just a couple of years behind him. Robert is the baby in the group, and he's in his 40s yet.

Ryssdal: Care to characterize for me how big a gift this is, the dollar amount?

MOORE: We're probably good for $80 million.

Ryssdal: That's a pretty nice retirement account you just set up.

MOORE: Yeah, it's firm things. It's very regulated. Yeah, it is. And that's basically what it is. It's protected for the employees.

Ryssdal: I'll tell you, Mr. Moore, you don't sound like a guy who's just going to sort of hang it up one day and walk away.

MOORE: I don't want to hang it up, no, Kai. I don't want to. I come to work everyday. I just love this place. I've got a corner office with windows all around. And I'm just surrounded with memorabilia, pictures, and all kinds of things of my long life, and I just don't see any reason to give it up.

Ryssdal: So you're still in charge, then, right? You're still the boss?

MOORE: Yeah, I still am. Well, I have the fiduciary responsibility of this whole thing. And until such time it's paid off, I have that responsibility, and I've chosen to be president. Anyhow, yes, I am still in charge.

Ryssdal: Bob Moore. The owner, for now, I suppose, or maybe not even anymore, of Bob's Red Mill Natural Foods up in Milwaukie, Ore. Mr. Moore, thanks a lot for your time, sir.

MOORE: Thank you very much, Kai.

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What an inspiring story. Now the employees as owners will have control of the company and decide how it is run. Isnt that exactly how "Socialism" works. Maybe conservatives will be offended by this inspiring story if they see the whole picture.

I, too, work for an ESOP company that was given to the employees for much the same reasons as Bob gave. The generous spirit of Gordon Lankton, currently the Chairman of Nypro, Inc., lives on in his ESOP company.
Working for an ESOP is very different from working for a public corporation. Freed from quarterly reporting to outside shareholders, the company can think ahead and deploy capital strategically.
Bob's employees should feel fortunate in many ways.

Kai:
A good story esp in this environment.
Can you shed a bit more light on the way this Transaction is structured - and how it all works (maybe Online if it maybe too much for your broad audience)
thanks,
vivek.

Bob's gift was that of the opportunity for the employees to purchase the company via the tax deductible contribution made to a retirement trust. Bob most likely received full fair market value for his shares as well as a deferment of all capital gains taxes.

The key going forward is for the company leadership to maximize the benefit to both the company and the employees by working to establish an true "ownership culture". Not always an easy task but if successful everyone WINS.

Sounds like he is "giving" it away in that the employees gain ownership of it over a ten-year period via their retirement/profit sharing arrangement. Not exactly a complete gift on day one but it sounds like in the end, the employees will own the company. That's more than they have now. And, it doesn't sound like they have to pony up cash out of pocket to do it. I could be wrong. Still, the reporter should have explained in more detail how this all works. Cause it sounds not quite like gift as most people understand the word.

KAi this transaction is not a gift The owner have major tax Benefits and the owner get paid for their shares The ESOP take out a loan to buy the company shares Cash contributions are deductible Contributions used to repay a loan Sellers in a C corporation can get a tax deferral Dividends are tax-deductible Please report all the facts in this story http://www.nceo.org/main/article.php/id/8/

When is a gift not a gift?

Rather then being 'given' it sounded as though the company was being sold to the employees with payments being made over the next 10 years. Here is a very similar story where a 4x as large company was sold to the employees, the owners took their $ and the company proceeded to go downhill making the employees retirement plans worthless. Some 'gift':
http://www.ysnews.com/stories/2010/01/010710_antiochco.html

Thank you GOD for people like Mr.Bob Moore and his partners. Thank you Mr. Bob Moore, even though I don't know and never meet you but I feel better today to know that out there still people care about fellow American. Thank you.

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