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Income is on the rise. Driver wages are on the rise. Prices are on the rise. It’s not a bad time to be in trucking, but the groups that make the profits (and the trucks) often don’t reap the perks of a booming business, and only reap them directly when their checks payroll increases.
Almost a decade ago, long-distance trucking (CCJ Top 250 founder, # 223) John Daniels was eager to retire and there was no shortage of suitors for the 365-truck hauler based in Albertville, Minnesota. But rather than cashing in and handing over the keys to the business he spent 25 years building, instead he turned to the people who helped him build: his employees.
“The reason he did this was really because he just wanted to keep the things he valued about owner-operator pay, company driver pay, quality of equipment and things like that, ”said general manager Jason Michels, who started with the carrier as a driver in 1999 before moving to shipping and then administration. “We still have employees who have been here for over 30 years and he wanted to make sure their jobs were secure and that the Long-Haul lifestyle, the brand, the image, the reputation … that everything remained. intact. “
“So we have corporate drivers with a really big six-figure balance on their ESOP account – guys who’ve been here from the start,” Jason Michels, CEO of Long Distance Trucking
Daniels effectively sold the company to employees – around 205 employees today – through an employee share ownership plan (ESOP). Unlike a 401 (k), which the company also offers, the ESOP is provided at no cost to the employee. The performance of the company determines the annual value.
Michels said being a fully employee-owned company has contributed to a low turnover rate (less than 25%) and that employees who have held up year after year have been generously rewarded.
“We have our [initial] valuation in 2013 in the spring – that was for 2012, our first year – and our stock was valued at 8.15 cents per share in 2013, ”Michels said. “In the spring of 2021, when our 2020 numbers came back, it was $ 187.32. So we have corporate drivers with a really big six-figure balance on their ESOP account – guys who’ve been here from the start. “
Since the overall financial health of the business determines the market value of the business and the value of employees’ ESOP accounts, Michels said the integral or total nature of ESOP prompts employees to ensure that all the departments operate at an optimized level and promote a high level of teamwork.
“I think, hands down, ever since we became an ESOP – and the first two years it was new to us – but as people started getting their statements and seeing their balances and seeing how they could not only have a result on their own future but also everyone’s future, we see membership, teamwork and the culture of quality, ”he said.“ Here at Long Haul, we have the accounting, security, shipping, we even have a store here, and it’s amazing how our mechanics will work hard on a truck just to make sure that driver and that truck can go. get a load so that in the end they know that the better they do this stuff and work together, the better the ESOP. It’s really that the cultural buy-in as a team and the people supporting each other is definitely, in my opinion, the biggest win with an ESOP. “
To be eligible, employees must work at least 1,000 hours per year. The amount of shares employees receive is determined by a points system based on W-2 earnings and their number of years as a Long-Haul employee.
“The more money we earn [as a business] – depending on how we do it, depending on how the industry works – it increases the price of our shares, employees usually get a certain portion of the shares and it tends to be about the same number every year, “said Tiffani Steinke, Long Haul CFO of Trucking,” but again, being a points system, the harder they work throughout the year, the more points they can accumulate based on their personal pay. “
The profitability of the company, Steinke added, would not necessarily affect the distribution or number of shares to participating employees, but it would affect the value of those shares.
The fact that the ESOP was a tool to maintain a low turnover rate allowed Long Haul Trucking to be picky in the selection of candidates.
“When we hire, we hire very selectively, but when we hire our people, they stay here for a long time,” he said, “the drivers on board, whether they are owner-operators or operators. ‘companies, they stayed here for a while. A long time.”
Explaining how ESOP works and the fact that there is no cost and no correspondence between employees has become a critical part of the onboarding process, Michels said. But this unique element in the financing of retirement has also been in a way a recruiting tool.
“(The employees) come for ESOP and then when they get here Tiffani sits down with each driver and reviews it on the second day of their orientation here,” he said. “It really turns them on when they start to see – when we can show them – the case studies of the drivers who have been here and what the numbers look like. They are starting to understand that they don’t have to shell out money. money for their long-term retirement. So, that definitely helps, sure. “
The benefits also trickle down to Long Haul’s 225 owner-operators. Since they are not actually company employees, entrepreneurs cannot participate in the ESOP, but they benefit from the efficiencies created by the employees who all have a financial skin in the game for each load that leaves the site.
“When all of the support staff work a lot harder together to support each other and improve on a daily basis, the by-product of that is good for owner-operators,” he said.