
On 81st birthday, Oregon man gives company to employees (2010) - cfontes
https://www.seattletimes.com/business/on-81st-birthday-oregon-man-gives-company-to-employees/
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decode
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>

~~~
peteretep
And there are significantly larger examples too:

<http://en.wikipedia.org/wiki/John_Lewis_Partnership>

~~~
avivo
A related cool example - worker owned from the start, 90k employees:
<http://en.wikipedia.org/wiki/Mondragon_Corporation>

~~~
walshemj
But mondragon worked so well for situational and cultural reasons Basque
culture is very cooperative.

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prbuckley
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>

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refurb
Not to sound like a cynic here, but:
<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
He's giving away the stock, so the gains are 0. There's no tax to be deferred.

~~~
refurb
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-...](https://www.nceo.org/articles/esop-employee-stock-ownership-
plan)

~~~
BCM43
Isn't that still about buying?

~~~
refurb
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.

~~~
kyleblarson
The timing of the transaction is also interesting given the impending change
in the estate tax laws with the "fiscal cliff". Reminds me of:
[http://www.nytimes.com/2012/11/20/business/economy/early-
div...](http://www.nytimes.com/2012/11/20/business/economy/early-dividend-for-
wal-mart-is-latest-move-in-tax-scramble.html?_r=0)

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neilkelty
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`

~~~
inovica
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

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gnosis
All companies should be employee-owned.

~~~
brc
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
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.

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Akharin
The article is from 2010...

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

~~~
chiph
Their steel-cut oats make excellent oatmeal. I'm not surprised they won the
competition.

~~~
abrowne
I eat their Scottish oatmeal nearly every morning. I get 12 lbs delivered
every 3 months. Love it!

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

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jacquesm
That's a really neat birthday present! Awesome.

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

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n_coats
Sounds like a great guy and boss! Bravo!

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shaaaaawn
This is amazing

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

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cyphersanctus
Beautiful.

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sdfasdfa
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
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
>>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.

~~~
schrodinger
Why "heirs excluded"?

I don't understand the logic by which it's only ok to give money to your
descendants... wouldn't that hurt them just the same in your worldview?

~~~
Avshalom
It's almost certainly a troll, just downvote it till it gets hellbanned and
move on.

~~~
schrodinger
Yea yea, but trying to give the benefit of the doubt... the last statement in
their comment _did_ indicate that they were open to changing their mind.

