EATON — Over a year and a half ago, Steve Cobb sold Henny Penny to all its employees, making the foodservice giant an Employee Stock Ownership Plan (ESOP) company.
The change was announced at a meeting with the company’s 600-plus employees on Thursday, Jan. 8, 2015. On Dec. 30, 2014, the company became employee-owned through the sale of its stock to a newly formed employee stock ownership plan.
The transaction ensured that Henny Penny and Wood Stone, previously owned by the Cobb family, will remain privately held.
The change has been a positive one, according to an update recently provided by Henny Penny President Rob Connelly.
For someone looking to come on board at Henny Penny, how would Connelly explain an ESOP?
“It is a retirement plan that invests primarily in the stock of the plan sponsoring company, in our case Henny Penny Corporation. It is similar to a 401 (k) plan except that all contributions come from the company; employees do not put money into the plan,” Connelly explained. “The value of this retirement plan for employees grows based on the number of company shares annually allocated to them, along with how the price of those shares changes. The most important factor in how the share value changes is how well we do as a company. Each employee contributes to our success and as a result, this has an impact on their future retirement benefit.”
According to Connelly, once the announcement was made, most employees were excited and happy — but also a little confused.
“Most understood that this is a good thing but really didn’t understand what it means, which is normal for a new ESOP company,” Connelly said. “All of our ESOP partners and advisors told us that it takes time – employees have received a couple of statements now and we continue to provide education sessions to all employees. Our productivity has always been high and that has certainly continued since the announcement.”
The first year and half have been “outstanding,” according to Connelly. “We had a really strong 2015; always good to get off to a good start in our first year as an ESOP company,” he said. “We also got off to a good start in 2016, so we are optimistic that we’ll have another good year.”
Recently, Henny Penny held an “Owner’s Day” where they announced how the value of the company shares had increased in value during the first year as an ESOP company. “Additionally, an important part of that event was that we presented 10 employees with a Jack Cobb Ownership Award,” Connelly said. “These employees were nominated by their co-workers and were from all parts of the company from production to office. These employees were recognized for acting like true owners and really represented the many employees we have throughout the company who truly treat this place like they own it,” he added.
What would Connelly say is the best thing about going to an ESOP?
“First and foremost, becoming an ESOP ensures that we will remain privately held, based in Eaton, Ohio, and that we continue to operate with the same people and with the same business plans we had prior to becoming an ESOP,” Connelly said. “Additionally, in most companies, employees receive wages and benefits. Employees typically have no or very limited benefit from how well the company performs. At Henny Penny, we already had in place an annual company performance bonus that provided all employees a benefit when the Company performed well. Now as an ESOP company – all of our employees have an additional, long-term means of sharing in the success of Henny Penny.”
“Our business continues to be strong with our long-time customers like McDonalds, Wendy’s, Chick-fil-A and KFC,” Connelly said. “We are also really excited to have several new customers join the Henny Penny family recently including: Arby’s, Sonic, Pizza Ranch, Del Taco and Wolfgang Pucks.
“In only our third full year of serving Arby’s, we received their supplier of the year award; a very strong achievement by a new supplier to their organization,” Connelly added. “And we continue to invest heavily in new product development, to help us to continue to grow our business for the long term.”
Established in 1957 in Eaton, Henny Penny is one of the country’s leading designers and manufacturers of premium foodservice cooking, holding and display equipment for thousands of restaurants, supermarkets and institutions around the world.
Reach Eddie Mowen Jr. at 937-683-4056 or on Twitter @emowen_RH.