Back in 1985, the future of Burns & McDonnell was uncertain. Our then parent company, Armco, contemplated selling off our assets to an international firm. That’s when our 10-person management team made the decision to purchase the company from Armco. In early 1986, that plan came to fruition and Burns & McDonnell became an employee-owned firm.
Today, our employees own the company through an Employee Stock Ownership Plan (ESOP) — a tax-qualified retirement plan funded entirely by Burns & McDonnell. The ESOP allows our employees to participate in the profitability of the company at no cost to them, simply by virtue of being an employee. Participation begins automatically on their first day of employment and employees are fully vested after six years. (Eligibility is determined by hire date and hours worked in a calendar year.)
We’re among an elite group of companies to reach this silver anniversary. According to J. Michael Keeling, president of the ESOP Association of America, Burns & McDonnell is one of the few employee-owned firms to reach their 25th anniversary, and one of even fewer 100 percent employee-owned firms to reach that milestone. He says it represents only 10 percent of the total ESOP community.
But even more unique is that Burns & McDonnell is an S-Corp ESOP, which means we can issue pre-tax dividends to our stockholders. It’s a way to ensure that more of our profits come back to the employee-owners. According to Employee-Owned S Corporations of America (or ESCA), Congress created the S-corporation ESOP structure in 1998 to encourage and expand retirement savings by giving more workers the opportunity to have equity in the companies where they work.
Our ESOP provides an added sense of retirement security for our employees, but it also drives our culture. Because we all have a financial stake in the company, we determine our success. There’s a sense of pride and mutual respect that doesn’t always occur when employees are working to meet the short-term objectives of Wall Street. To someone who hasn’t experienced it, it’s hard to explain. But it’s part of what makes Burns & McDonnell pretty special.
Our 25th anniversary comes on the heels of the financial meltdown that depleted many retirement accounts. Fortunately for our employee-owners, our ESOP has remained afloat, and even thrived, during the recession.
The ESOP is an important part of our history and our future, and it’s why we’ve been celebrating our silver anniversary all year long. This milestone is just one of the reasons our employees are proud to be owners.