Rick Urschel said the decision to become employee-owned was not an easy one, and was in the works for nearly a year.
"I am grateful that the shareholders of the company were able to realize what an incredible benefit this would be for the employees, and what a wonderful way we can reward them for their years of dedicated service."Rick Urschel said.
"Now, instead of the Urschel family being the stewards of the company, we have passed that obligation on to the employees. Today, we're all part of the same family," Urschel said.
Urschel Laboratories is global company that specializes in food-cutting technology.
ESOPS are designed to give the employees an ownership interest in the company without any out-of-pocket cost to the employee. Shares are allocated to employees' accounts on an annual basis and the employees sell their shares back to the company for cash upon retirement.
ESOPs give employees control over future transfer of the company, making it difficult for the company to be sold or merged with another company.
Dushan Nikolovski, director of the Center for Entrepreneurship Success at Purdue University Calumet, said while he isn't familiar with Urschel Laboratories and its ESOP, he does know of a number of advantages to forming an ESOP in general.
"Employees are more motivated at work when they have a stake in the company. This leads to increased cooperation and productivity and the ability to put out a better quality product," Nikolovski said.
It's advantageous for the employer, he said, in that it relieves the cash flow.
"The company will probably be more competitive and get cash in," Nikolovski said.
Possible disadvantages, he said, include that the value of the employees' ownership stakes could diminish if the company's value goes down and that the administration and employees could clash on future plans for the company.
Rick Urschel said the company decided to convert to an ESOP due to the uncertainty of the family's fifth generation, the majority of whom are under age 20, to run the business.
"It quickly became clear that conversion to an ESOP was fair for the company, the shareholders and the employees," he said.
Urschel Laboratories has been owned and operated by the Urschel family since 1910, when it was founded by William Urschel.
Karen Caffarini is a freelance reporter for the Post-Tribune.