Why is Our Employee Ownership Important to You?

By Christopher Chapman

We proudly state on our website and in many of our documents that we are an employee-owned company. The question may arise: so what?

For us, it means a great deal. The arrangement, in which almost all of our company’s stock is essentially owned by the employees themselves, actually has a significant impact on our clients – in favorable ways. An explanation can begin with a tale about our ESOP – that is, our Employee Stock Ownership Plan, which we adopted eleven years ago.

An “ESOP” Fable

Not long ago, and not very far away, long-time local banks were bought up by regional banks and merged into much larger organizations. Employee turnover soared, costs to customers and trust clients rose, and many important relationships began to be serviced by people who customers and clients had never met and who sometimes did not stay in place very long.

The new ownership entities expected the employees who remained after downsizings to generate more revenue for them, which led to decreases in service quality. In Vermont, that also meant capital was sucked away to be used for expansion in larger, urban markets, leaving much-reduced operations to serve customers. The bank merger trend was part of a larger national phenomenon, not only among all kinds of financial service providers but in all areas of the economy.

Along the way, small companies that did not want to be vulnerable to takeovers began to take advantage of an interesting feature of federal law that was enacted in 1974 to protect employee pensions. You may have heard of ERISA, which also protects 401(k) plans from abuse. One type of employee benefit plan with ERISA protections is the employee stock ownership plan, which a company can use to hold stock owned by its own employees.

There is a moral to this story. It sugars off to, take care of your employees, and they will take good care of the business. And that means, its customers will be better served.

Our Story

We want to remain independent into perpetuity. In the financial services business, that means keeping the company stock away from vulnerability to tempting offers and even a hostile takeover attempts. In adopting our own ESOP, we also gather our own earnings into it that would otherwise disappear into outside hands as
dividends. The result has been a source of long-term savings for employees who can accumulate value for retirement and be motivated to remain.

For our clients – and the communities where we live – the result has been broad. Long-term employees know their clients, and our clients know who is serving them. An old-fashioned value of customer service is preserved. And a form of craftsmanship in our knowledge-oriented business results from ever deeper expertise. For the places where we live, it means our people sink deeper roots into the community.

In short, our employee ownership motivates us to think in the long term, and that is ultimately where the most value is accumulated for our clients.