Gear Manufacturer Becomes an Employee Owned Company

On November 17, 2005 the Gear Motions Companies (Nixon & Oliver Gear) took the first step in becoming a 100% Employee Owned Gear Manufacturing company by creating an employee stock ownership program called an ESOP. An ESOP is a “qualified” defined contribution employee benefit plan that buys the stock of the company. It is very similar to a 401k plan except that the stock in the plan is Gear Motions Stock (Nixon & Oliver). ESOPs began in 1974. There are over 11,000 ESOP companies today who employ over 8 million people.

Sam Haines believes an ESOP will give employees the opportunity to contribute to the company’s success AND reap the benefits. Even more important to the employees and the community; the company stays right where it is. In addition, Sam says, an ESOP gives the company some important competitive advantages. One is “Employee Owners” and another is significant tax advantages. When asked “why implement an ESOP,” Sam commented “three reasons.”
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Nixon Hosts Open House for new Employee Owners: On a beautiful fall day the new GMI Owners brought their families and friends together for a nice luncheon and to see what $4 million in new technology (And the FIRST Stock Certificate!) looks like as Owners!! Thanks to all the folks from Buffalo that made the trek!!

ESOP Meeting

ESOP Lawyer, Tabitha Crosscut, leads three other lawyers, our Banker, and “the Boys” through a thick pile of ESOP documents.

ESOP Facts

The ESOP provides a seamless and stable transition of ownership, and because the company has reinvested its profits over the years, it is very strong financially, making the transition much easier on the company.

An ESOP is a way to give back to the people – the company’s most valued assets – who helped to build the company over the years.

Lastly and most important, an ESOP gives the employee owners a piece of mind for their future. If the company continues to do well, everyone shares in the success!

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ESOP Lawyer, Tabitha Crosscut, leads three other lawyers, our Banker, and “the Boys” through a thick pile of ESOP documents.

The lawyers arrived that first day in November and the first third of the Gear Motions Stock was transferred to the ESOP. The Company borrows money from the Bank on behalf of the ESOP. As the loan principle is repaid, an equivalent amount of stock goes to everyone’s ESOP account very much like the 401k does. The sale will be spread over the next ten years. (1/3 now, 1/3 in 2010 and the last 1/3 in 2015.)

ESOP Meeting

Steve and Jeff Haines (Sam’s brothers) reviewing some of the documents during the closing with PatGN2172006_4

Sam Haines and the current Management team stay on throughout the process. (Sam may retire in 2015 but we don’t see him slowing down yet.)

Sam continues as President until at least 2015 (heck, he’ll only be seventy!). He votes ESOP stock as trustee for the employees until about 2010 when the employees become the majority owners. At that time, the Company will begin to look for another Trustee and or a Board.