Readers respond to the April issue's Storyteller-in-Chief column by Bob Moore of Bob's Red Mill.
The following is reader feedback on Bob Moore's Storyteller-in-Chief column, "Do What You Love and It'll Bring Success," published in the April 2019 issue of Oregon Business magazine. Moore is the founder and president of Bob's Red Mill Natural Foods.
Bob Moore is clearly an icon of the regional food industry, but it is disingenuous to perpetuate the myth that he "gifted" Bob's Red Mill to his employees and harmful to an otherwise stellar brand. Bob sold his stock in the company to the ESOP (Employee Stock Ownership Plan) Trust.
It is a great thing that Bob chose to sell his stock to the ESOP Trust rather than to a strategic buyer. It is great for the employees and the business community at large. Obfuscating the nature of the transaction as a gift when it was a SALE is unnecessary and frankly puzzling. It’s as if PR got ahead of the truth, which is too bad for the brand.
When one of the co-authors [Josh Hinerfeld] helped establish an ESOP Trust at Organically Grown Company, he arranged for the company to buy back shares from shareholders who desired to monetize some of their company shares. In turn, the company sold the shares to a newly formed ESOP Trust in exchange for a promissory note.
Over time, the company provided cash to the ESOP Trust in the form of contributions and distributions. The ESOP Trust, in turn, used the cash to pay down the promissory note and allocate ownership interests in the company to ESOP plan participant accounts. After an ESOP plan participant terminates employment, the ESOP Trust is obligated to repurchase the shares from the terminated participant's account.
Bob Moore could have sold his company to a strategic buyer. Rather than selling the business to the highest bidder, Bob Moore and his team created an ESOP. In doing so, they created a vehicle to transfer millions of dollars of equity in the company to employees.
Bob Moore's "gift" was the opportunity he provided employees throughout the organization to build wealth. We would encourage other owners of closely held businesses in Oregon seeking to monetize their investment to consider creating ESOPs as well.
Josh Hinerfeld and Jim Hensel
Response from Bob’s Red Mill:
We often receive questions around our Employee Stock Ownership Program (ESOP) and we’re happy to talk more about it! The intent of Bob’s original article was to share a few of the many elements over his 90 years that have inspired him throughout his career, which didn’t leave a lot of room for detail.
Bob did work with a financial group to turn his ownership into stock, which was then given to the company’s employees at no cost to them. This has allowed for employees to put kids through college, purchase houses, etc., and assured job stability at a time when many natural food companies are being acquired.
Thank you for helping to further educate our local business community about this unique option. Like you, we hope it inspires more business leaders to consider choosing this path.
Chief Financial Officer
Bob’s Red Mill Natural Foods