Why We Gave 48 Percent of Harpoon to Our Employees
Daniel Kenary, Harpoon Brewery
May 30, 2016
Evergreen companies have a special capacity to do tremendous good. At a time when a lot of people look around and feel like the system is rigged — the rich are getting richer, CEOs are paid extreme amounts, private equity firms are taking over — Evergreen companies can stand up and say: There is another way to do business. Greed should not be the driving force. We can all do well by sharing the load and the rewards.
At Harpoon Brewery, this is more than just a nice ideal — it’s how we operate.
Two years ago, my founding partner and I reached a critical impasse. He wanted to sell our 28-year-old Boston-based brewery to either a strategic buyer or a private equity firm. I did not. Despite the fact that there were a number of potential buyers out there willing to set us up financially for life, I couldn’t do it. I had a great deal of pride in what we had built and so much affection for the people who helped us along the way. I also have a decent amount of suspicion of some private equity folks, many of whom are out to make a quick buck at the expense of everyone else involved. Instead of selling out, I decided to sell in. To ensure that we would never be taken over by private equity, I thought we should implement an employee stock ownership plan (ESOP), which would give ownership of the company to our employees.
My partner still wanted to sell, though, and we couldn’t reach a resolution. Between the two of us, we had 90 percent of the company shares — 45 percent each. We decided to take our dilemma to the six other shareholders and let them be "the jury." On March 7, 2014, they voted 6 to 0 for the ESOP. We bought out my partner, and some shares from five of those six shareholders and put 48 percent of Harpoon’s shares into an ESOP trust.
One week after the deal closed, I held a meeting with the approximately 200 full-time Harpoon employees and told them that I wanted them to meet the new owners of a minority stake of Harpoon. They glanced at the door, expecting Budweiser or MillerCoors to walk in. I told them to all stand up and look at each other as they were all the new owners. People started cheering and crying. It was so much fun.
For the past two years, getting the ESOP up and running has been a great challenge. We’ve had to ask people to take their blinders off a bit and really recognize that their efforts have an effect on everyone’s financial well-being and security. We launched a committee of 12 employees to manage ESOP education and activities.
The activities are mostly social on a monthly basis, and annually we have an event to present statements of distribution (share price announcement). The education aspect is ongoing for both new employees and existing ones. We have an owners’-club meeting once a month. We have Friday sessions to talk about ESOP issues and to provide an opportunity for employees to talk about ideas. For instance, if a guy on the bottling line has an idea to save a penny a case, we build from there. A penny a case can quickly turn into $90,000 — and that’s money that will line all of our pockets. As owners, employees participate in Harpoon’s profits.
Our unified vision is to create a brand of enduring value. We now have a culture that helps employees achieve financial security. This is not your normal business. Just going through the motions and punching the clock doesn’t cut it here. We want our employees and potential employees (all new full-time employees become participants in the ESOP after working 1,000 hours) to think this is an attractive way to make a living and to look at it as more than just coming to a job every day.
There is too much greed in our society. I feel strongly that an Evergreen company can prove there is a way capitalism can work for everyone — not just the bankers and private equity firms. My shares decreased in value by two-thirds when this transaction was completed. But I am a fervent believer in my employees, and I am enjoying this cool, supportive culture we have created.
We have found that there is no better way to earn a living than running our own Evergreen business. Together.
Daniel Kenary is the Co-Founder and CEO of Harpoon Brewery.