The following appeared in the Akron Beacon Journal on Saturday 16 March, 2005.

Employee stock owners enjoy clout in company   More than 300 people attend conference on benefits of ESOPs By Erika D. Smith Beacon Journal staff writer

Pretty soon, the life's work of Barry Romich will belong to 85 people who aren't relatives.

It'll be their job to carry on the mission of Wooster-based Prentke Romich Co. It'll be their job to make sure the company remains profitable. And it'll be their job to make sure the company's speech devices for the disabled remain an industry leader.

But Romich has no qualms about any of that.

He's content to sell Prentke Romich to workers under an Employee Stock Ownership Plan, or ESOP. He isn't alone, either.

More and more small-business owners are turning to ESOPs -- first, as an avenue for succession and second, as a way to give employees control in an economy rife with outsourcing.

Both of those themes came up again and again Friday at the 19th annual Ohio Employee Ownership Conference at the Hilton Akron/Fairlawn.

More than 300 people -- which is more than organizers expected -- showed up to learn about forming and maintaining an ESOP.

Right now, about 450 Ohio companies are partially or wholly owned by workers. Most are in the 100-employee range and are privately owned. Cincinnati-based Procter & Gamble Co. is the exception.

The ESOP concept was created in the 1970s, but didn't gain ground until the 1980s. Proponents of ESOPs now want to promote them as part of an overall economic strategy to keep smallbusinesses from leaving town.

``We make the case that it's been very successful,'' said J. Michael Keeling, president of the ESOP Association. ``Sure, there are bumps in the road, but you have that with any business (ownership) structure.'

'Despite the growing popularity, many aging business owners just don't think about forming ESOPs when deciding who will succeed them in business, said John Logue, director of the Ohio Employee Ownership Center.``

More than anything, people don't like to come to grips with their own mortality,'' he said.

Other business owners are daunted by the complicated legal, financial and regulatory maze of setting up an ESOP.

``This is major surgery in most cases,'' said Jared Kaplan, a partner with the law firm McDermott Will & Emery LLP. ``It's not a little outpatient procedure.''

Changing an ownership structure affects everything, from suppliers to customers to employees to the generations of relatives who founded and ran the company, he said. Smart people plan for such eventualities months and even years ahead of time, Kaplan advised at Friday's conference.

But ESOPs have their benefits, too.

Chief among them are the tax breaks available to the owners who sell their companies and the companies themselves.

ESOPs also are known for boosting morale.

Sure, there's the company stock that employees will own, but there's also a sense that they have a real say in the company's development and direction. (Typically, the latter is done through an internal ESOP committee or representative elected to the board of directors.)

There's also the trust factor -- something many Ohioans said was lacking after their jobs were outsourced without warning.

``I think that's a large issue now,'' Logue said. ``How do you guarantee your jobs aren't moving to China?''

At Prentke Romich, creating an ESOP wasn't about building trust or getting recruits for the company's mission. Everyone, Romich said, is dedicated to building touch-screen devices that speak for people who've lost their voice.

``We're into the mission very deeply,'' said Joe Durbin, chief financial officer of Prentke Romich.

Creating an ESOP was about building cooperation.

Employees understand that their futures now are linked to the future profitability of Prentke Romich, President Dave Moffatt said. People have started to learn every aspect of the company and look, on their own, for ways to make it more efficient.

``After the first transfer of ownership,'' Romich added as an example, ``an e-mail went out telling everyone to wipe their feet when they come in the door because it's expensive to wax and strip the floor.''

Prentke Romich is only starting its quest to become wholly owned by employees. It will take as long as five years for the $20 million company to complete the transition.

Romich is looking forward to it.

``One employee used to always say `Hi, boss,' '' Romich said. ``Now, it's fun to return the favor.''

Erika D. Smith can be reached at 330-996-3748 or at ersmith@thebeaconjournal.com.

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