Fox Bros. Piggly Wiggly adopts employee ownership plan
Fox Bros. Piggly Wiggly Inc., a chain of seven grocery stores in Milwaukee’s suburbs, said Tuesday it is adopting an employee stock ownership plan to chart the future ownership of the business and help the company compete in the region’s super-competitive grocery market.
Owners Pat and Lori Fox said there were a number of reasons they decided to transfer ownership of the business to the folks who work there.
“The obvious one is we’re not getting any younger and so we had to figure out exit strategy," Lori Fox said.
They could have sold the company outright. However, Lori Fox said, “We really didn’t like that option because we really value our employees and that would create a lot of uncertainty for them. We really wanted to protect them but recognize that we needed some kind of exit strategy."
They decided an employee stock ownership plan, or ESOP, was the way to go.
Adopting the plan doesn't mean the Foxes are leaving the business.
"It’s a long-term exit strategy," Pat Fox said. "We’re not going anywhere. We’ll still be working and running the company."
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The Foxes aren't alone in choosing to implement an ESOP.
"Anecdotally, it seems like there is more interest and one of the reasons might be so-called Silver Tsunami and the baby boomers who are getting ready to retire," said Patrick Mirza, director of communications for The ESOP Association, a trade association based in Washington, D.C. "One of the common ways that an ESOP gets formed is somebody starts a business, then they get to the point where they want to retire ... and there is no one else to take the business on so they set up the ESOP trust and sell it to the employees.
"It's a great benefit."
There are an estimated 7,000 companies in the U.S. with ESOP plans, according to the association.
Fox Bros. employs 735 people, at least half of whom would be eligible to participate in the plan.
Another reason why companies set up an ESOP is they want their employees to be treated well.
"It's their culture and they're proud of it and they want it to stick around," Mirza said. "If you sell it to some competitor, that culture is probably gone."
An employee stock ownership plan is not unprecedented in the grocery industry. Janesville-based Woodman's is employee-owned and Publix, a large grocery chain in the southern and southeastern United States, is an ESOP company.
Pat Fox said he also sees the ESOP as a way to help differentiate the company in the Milwaukee area, one of the most competitive grocery markets in the country.
"We view it as a growth vehicle for our company," he said. "It opens the door for capital formation and the potential for acquiring more stores and growing our business."
The Foxes are also counting on the plan's being a way to bolster the company's workforce.
"In some ways one of the biggest threats to our business is finding, attracting and keeping people that are going to execute a great service experience for our guests," Pat Fox said. "We view it as an attraction and retention tool."
The plan also backs up the message the chain has always tried to send its employees.
"We’ve always told our employees how much we value them, and we’ve always shared the message that we can’t do this work without them," Lori Fox said. "It was another consistent message to them about how much they are valued."
Fox Bros. operates grocery stores in Hartland, Oconomowoc, Richfield, Jackson, Slinger, Hartford and Saukville.