Running a Sustainable
Employee-Owned Business
As employee-owners, we own CFP. For us to receive the maximum benefit as owners, it’s important that our company is well run. There are a few high-level challenges that are unique to employee ownership that we must navigate together.
Paying Down Our Debt
When we converted to employee ownership in [YEAR], we financed the transaction with a loan. This is a very common way for companies to become employee-owned, and the loan is how we were able to get the shares without employee-owners putting in any of their own money. But the loan must be paid back on schedule. Generating enough profit to pay down our debt is one of our top priorities as a company.
Determining Annual Allocations
Annual allocations are how you build ownership wealth. As we pay down our debt, shares of our stock are released. These shares, along with any shares we’ve bought back from retired owners and any shares forfeited by owners who leave before they’re fully vested, create the pool of shares that we allocate each year. The total pool is divided among all eligible employee-owners based on salary and reported to each person on their annual statement.
Managing Our Repurchase Obligations
For you to benefit as an owner, at some point the company must buy back your shares. To keep ownership in the hands of current employees, we use company profits to buy shares back when people leave. The promise to buy shares back is very important, but it also creates a liability known as the repurchase obligation.
We must manage the repurchase obligation by allocating the right number of shares each year. If we allocate too many, we could create a situation where our company gets in financial trouble. But if we manage the repurchase obligation well and come together as owners to make our company successful, we will all benefit as owners.