Hutchens now 100 percent employee owned
Employees now have personal stake, stock in the company
Hutchens Construction recently made an ownership transition, as effective March 1, the company, which has been in Cassville for 55 years, became 100 percent employee-owned.
The entirety of the ownership of the company was transferred to employees through an Employee Stock Ownership Plan, otherwise known as an ESOP. An ESOP is a qualified retirement plan that buys, holds and sells company stock for the benefit of its employees, providing them ownership in the company at no cost to them.
"It is a retirement plan that works like a 401K, except it only invests in the stock of the company," said Kayla Ragsdale, chief financial officer for the company. "As the company has profits, each year, the board of directors will decide on a set amount of money to purchase shares that are allocated to the employees based on wages. Based on the whole salary pool of everyone that's eligible, whatever each individual's percentage of that salary pool is, that's what percentage of the annual contribution they receive."
"We're really excited about it. I think it's going to be really good for the company, and good for the employees. It's a win-win."
Despite the change in the company's structure, nothing has changed on a staffing level other than the size of the family, and Phil Hutchens will remain president of the company.
"Hutchens Construction has always been a family-owned business," Hutchens said. "The size of that family got a whole lot bigger with the ESOP transaction."
Nothing has changed with the services the company provides, either.
"It means that we, the employee owners of Hutchens Construction, are even more driven to provide you with the best material, the best craftsmanship and the best customer service in the asphalt industry," said Brandon Finn, chief operations officer. "You can rest easy knowing that Phil Hutchens has retained his position as president of Hutchens Construction and that he will continue to lead the successful organization he has built on into the future. The employees and management of Hutchens Construction look forward to continuing to serve you for years to come."
ESOPs are becoming increasingly more common, due to the intrinsic, practical and financial benefits they offer. There are over 6,700 ESOPs in existence covering 14 million employees, the majority of which are in privately-owned companies.
According to the National Center for Employee Ownership, studies have shown that ESOP-structured companies outperform non-ESOP companies.
Ragsdale said on March 5, during a company-wide meeting, Phil and Valarie Hutchens made a surprise announcement that the company had transferred 100 percent ownership to its employees by forming an ESOP effective March 1.
"At the meeting, the trustees said there are tons of privately-owned companies across the U.S., which are primarily owned by baby boomers trying to retire, don't want family members taking over their business, and don't want to sell their company to someone outside the business, so they are transferring ownership to their employees because it keeps their jobs secure," Ragsdale said.
An ESOP has several benefits, she said. It helps preserve a company's legacy, culture, motivates employees to improve quality, productivity and customer satisfaction, allows employees to benefit from the company's success, provides retirements to long-term employees, avoids the risks of selling to an outside firm and allows the company to operate in the same manner, with no change in staffing or management.
"A new owner might fire all our employees, sell our equipment and move us somewhere else," Ragsdale said. "So, that's one of the reasons Phil wanted to do an ESOP. The management is staying the same. Because the employees benefit from how well the company does [within an ESOP], it gives them motivation to help build the company, control costs and make it more profitable. In general, ESOPs tend to do better than other companies because their employees are so invested in how well their company does."
During the meeting, Ragsdale said Hutchens emphasized how important it is for employees to possess an ownership mentality and do their part to control costs.
"Generating one dollar in revenue by increasing sales will involve a lot of costs," he said. "At the end of the day, you might only keep a nickel. If you generate the same one dollar by reducing expenses, you keep the whole dollar." Since it began in 1961, Hutchens Construction Company, founded by Evan and Marcia Hutchens, has prided itself on being a family-owned business and wants to continue that culture. With its first equipment purchases of a backhoe and dump truck, the company quickly grew, and acquired a 600-gallon distributor truck to spray liquid asphalt in poultry houses and to chip and seal driveways. Later, a Caterpillar 212 motor grader was acquired and the company began blade mixing cold-mix asphalt for use in patching and small driveways. In 1970, they purchased a small, 25-ton-per-hour Barber Green continuous-flow asphalt plant and located it in a quarry in Monett. In 1973, after working summers part-time, the Hutchens' son, Phil Hutchens, began working for the company full-time. The same year, Hutchens purchased the quarry in Monett. Work steadily increased, and in 1985, the asphalt plant was upgraded to a new ADM 100-ton-per-hour Drum Mix Plant.
In 1986, a second quarry operation was added in Eagle Rock. Evan passed away in 1992, and Phil assumed his duties as president. Since that time, HCC has experienced a steady pattern of growing, currently operating four asphalt plants, with operations manager in Missouri and Arkansas, and four aggregate quarries in Missouri.
Hutchens Construction has received more than 50 awards recognizing quality, safety and environmental awareness from state and federal organizations, and it donates time and money to school events, community sporting events, seasonal festivals and other community events.