The New York Times today reports that Moog Music owner & CEO Mike Adams has announced an employee ownership plan:
At the Moog synthesizer factory in Asheville, N.C., on Tuesday, Michael Adams, the company’s owner and chief executive, wanted to share some life-changing news with the entire staff.
“I’ve sold half the company,” he told them.
Anxious silence descended among the tight-knit group…. Then Mr. Adams revealed the buyer.
“I sold it to you,” he said.
According to the report:
- Workers will now own 49% of the company through an employee stock ownership plan:
- The company can buy out Adams’ remaining 51% stake over the next six years;
- Employees get vested in the plan over the first 6 years of their employment;
- Upon retirement, employees can cash out the shares they’ve accumulated; and
- Adams plans to devise a succession strategy during his remaining time at Moog.
via NYT
Essentially turning the company into a co-op over the coming years. This is a great move.
This is really cool news.
Everybody wins. I wish more owners did things like this instead of selling out for a quick buck.
Adams is still going to make out like a bandit, but he’s also taken a company that was basically dead and made it what it is today.
Exactly right and in this case, he actually deserves whatever he’s being compensated for that smart thinking and hard work – unlike what most CEOs/Presidents do for probably WAY more $$$. If it wasn’t for him, there possibly could not have been a release of the Minimoog Voyager and all the other wonderful instruments they’ve created over the years.
Maybe Amos was considering moving on….This is the ploy to keep him.
Time for a poly synth and affordable mono racks?
Maybe Amos was considering moving onwards and upwards. This maybe the ploy to keep him.
Great news! Not only Amos but some fantastic people who make this company this big now have more reasons to stay
Damn commie hippies and their communist moves!
(is humour, this is awesome!)
Moog firmware update.
CNN was reporting that one of the new owners was caught trying to build a poly synth.
I find these things are often a double edged sword. In principle I love the idea of workers owning the workplace, and I don’t see an issue while Adams retains 51%, and ensuring that gives one entity control. But once you have the workers owning and voting by majority, which seems to be a long term plan, then you have a collective. Which again, in principle is great. But when it becomes a collective it then isn’t a good model for being successful in a ruthless capitalist market. When it comes to having a vote on expenditure of profit, do the funds go towards R&D of a new polysynth or extra benefits for the collective workforce? It is a great principle, but I hope they don’t get lost, and make sure they continue to give control to a select, passionate about the company and its business – as a collective group of people that are on the take, no matter how passionate they may be, is the worst business model you could devise – everything would just get burnt up over time.
Employee owned businesses – where employees have a concrete stake in the company’s success – generally out-perform others.
And they’re not run like ‘hippy communes’ – the CEO is responsible to the stockholders, they just happen to be the employees.
Employee shareholders may encourage the CEO to think long term vs trying to make Wall Street happy.
I can’t disagree, but if it becomes a democracy, a collective when equal shares equals votes, and I ain’t talking a hippie commune but standard business, then it goes tits up. Businesses may do better when the workers have a stake, but they always do worse when those same workers call the shots. Then you may go down the road of having a equal stake and voting for management, then it goes all FIFA with backhanders and deals to hold control and win elections – and the money will be creamed from any successes.
It is a great ideal, but so dangerous. The issue really is a collective is nice and empathetic, were as the skills needed to run a successful company are single-minded, verging on sociopathic.
I’m going to assume that you work in an industry where you have felt the acute pain of something akin to ‘design by committee’. You’re right, it’s awful.
Employee owned corporations do not run this way. In a public company, do share holders ‘call the shots’? Of course not. You hire pros to be pros—employee owned companies are no different.
This works great untill you get a conflict of personalities within the voting population. Then everything grinds to a halt as petty fiefdoms are built. It’s awesome that employees are suitably invested and rewarded. But ships without a clear and strong captain always run aground, or turn insular and weird.
employee ownership != anarcho-socialist commune.
I think there is confusion in what an employee owned business is. They will still have a formal system of bylaws for voting standards and decision making. They will also maintain a CEO to carry out the mission of the company. They could even have a full executive management team – all working to help fulfill that mission. A company can be employee owned and still have all of those governing bodies working for them – including a board of directors. This just means that the employees have some control through that formal system of management and, most importantly, are directly rewarded for company performance.
The potential downside is when one individual possesses an idea or specific competency that gets diluted – which is why many companies this size aim to keep as much control as possible concentrated in just a few owners. Moog isn’t a one trick pony and I see them as a diverse group of talent that can now grow that talent pool even more by offering a better employment alternative than many of its competitors.
The NYT article is worth reading. A few things that stood out to me:
> “a production employee who starts making $12 an hour”
Honestly, considering the price of anything with the letters M-O-O-G on it, this is disappointing.
> “Making Moog an employee-owned company will also fulfill a dream of the company’s founder.”
> When Mr. Adams came on as a partner in 2002, the company’s eight employees hadn’t been paid in nine weeks.
“Honestly, considering the price of anything with the letters M-O-O-G on it, this is disappointing.”
Disappointing? What country do you live in? I’m sure their employees can go get similar jobs manning a soldering iron and snapping ribbon cables onto connectors for $7.65 hr to start, because that’s what all other employers pay for doing that job. What the final product sells for never changes the pay rate. $12 hr to start as an electronics assembler is generous.
I live in Oregon, US.
While I realize the device I’m typing this on was assembled by workers making far less, the price of it has been almost entirely commoditized. The price of a Moog synth or module or pedal or whatever is far from that. They’re priced like artisanal units.
I’m not saying they’re not amazing pieces of gear and worth every penny to some but how long do you think it would take for Moog production employee with two kids to save up for a Moog mono they helped build?
Look, I’m just an idiot on the Internet. I have absolutely no idea what it costs to build a voyager. I’ve just long sort of romanticized that the people making a voyager made more than $25k a year. Hopefully this move by Moog makes that true.
To the McCarthys out there,
A few recognizable and successful employee owned companies:
Publix (Fortune 100)
WinCo
Kelly-Moore Paint
Bob’s Redmill
PenMac
FullSail Brewing
Graybar Distribution (Fortune 500)
For the ESOP curious:
* http://www.esopinfo.org/infographics/economic-power-of-employee-ownership.php
* http://www.usnews.com/opinion/blogs/economic-intelligence/2012/05/31/why-we-need-more-employee-owned-businesses
* http://en.wikipedia.org/wiki/List_of_employee-owned_companies
And Full Sail Brewing just sold to a private equity firm. I was quite saddened to hear that as I enjoy their beer and have been to the brewery a few times.
Herein lies the danger of what Moog’s doing, what’s to stop them 5 or 10 years from now from simply selling to Behringer or Gibson and making a ton of money? The brand and products will certainly suffer but who cares when you can buy a yacht with your sellout money?
I love the idea of employee owned companies but there still has to be people at the helm that are continually interested in the development and growth of that company. Only time will tell how this goes for Moog.
That’s true of any company and has nothing to do with employee ownership. That aside, to assuage your concerns, this is a 49% employee ownership situation.
At the risk of raining on anyone’s parade and damaging employee morale, I’d like to offer three appropriate cliches:
1) The devil is in the details.
2) A leopard can’t change its spots.
3) If it sound too good to be true, it probably is.
Sorry, but if you’re a Moog employee, I suggest you get a lawyer to interpret the fine print for you. I doubt you’ll be pleased.