Hoover releases 30 percent of Kennie's to employees
When Kennie's Markets Inc. president and owner P.K. Hoover looked into the future, he knew he would not last forever. He had to plan for the future and change his company.
As a result, Hoover began the transition by selling 30 percent of the company.
Hoover didn't sell to another chain or ownership group. He sold the company to his employees.
With the sale of the company, Kennie's Markets Inc. adopted an Employee Stock Ownership Plan (ESOP), which allows the employees to become owners of the company without investing their own money to purchase stock.
In addition to becoming owners, employees will benefit during their retirement by cashing in on stock value.
“This is a great opportunity for our staff,” Hoover said. “It also will provide for a smooth transition to the next generation of (the company's) leaders.”
Though Hoover still owns 70 of percent of the company, he called a meeting of his employees Tuesday night to welcome them as partners. The meeting was held at the Maple Avenue Middle School in Littlestown and employees of the Gettysburg, Littlestown, Taneytown, Md. and Spring Grove stores attended. Employees of the ACE Hardware store in Littlestown, which Hoover also owns, are not affected by this change.
The 150 eligible employees - those that have been with the company more than a year, are at least 21 years old and work 1,000 hours per year - will not actually get a stock certificate and ownership decision power. Instead, they will collect on the monetary value of their portion of the stock upon their retirement or termination of employment with Kennie's.
Instead of owning the stock shares, the value of the stock shares is banked in an employee account that will only be paid when employment with Kennie's ends.
The amount of stock that the value is calculated on is determined by the percentage of the payroll annually that the employee earns. For example, an employee earning 1 percent of the company's payroll would receive the value of 1 percent of the stock.
However, for an employee that would end their employment today, they will receive nothing because the stock shares currently hold no value.
The ESOP group has to pay Hoover for the stocks. When the group purchased the stocks, they took out a loan from Kennie's. Upon payment of the loan, the stocks begin to acquire value.
Kennie's employees Ginger French and Marion Lambert serve as trustees for the ESOP and told employees they will attempt to make the best decisions.
The stock value is determined at the beginning of each calendar year.
The ESOP also will not replace any other employee benefits, Hoover said..
Hoover said the ESOP is a reward for employee performance and dedication.
“If the company does well, you do well,” Hoover stated. “Giving employees ownership is probably the second most important event in our company's history.”
In the long term future, after the ESOP group pays off the 30 percent of ownership stock owed now, Hoover will most likely be selling more ownership.
For the Kennie's customer and employees, nothing will change in the day to day operations of the stores.