Iowa-based flatbed carrier TMC transitions to employee-owned company

Hey now...not all 3rd generations do things wrong!

 

You're in the minority, like fleece purchase operators that actually get title to the truck.

 

Now you are putting me in the same sentence with fleece purchase operators...I think I just threw up a little in my mouth...

 

Mc
Donnell Douglas did that and then sold out. My so called share of it went from $700,000.00 worth of stock to 55K overnight and no one ever explained that. I had to retire early and reinvest my money in the stockmarket and try to be ready to retire at age 105 or something like that. I went a bought a truck and thats like owning a farm. You can go broke farming so I bought 2 and went broke twice as fast and now I'm twice as happy. Employee owned is a crock. Smells like a Japanese Fish market to me. They're taking me away to the funny farm HEHEHOHOHAHA, where life is easy all the time.....

 

While I admit I skimmed the information there, It looks like a program like this might be beneficial to someone hoping to be an o/o someday from a tax standpoint. Looks like you can purchase shares tax-deferred, then trade those shares for shares in any s-corp. For example your own s-corp. I could be reading that wrong but it looks like if you play it right it can have its benefits.

 

Notice the line late in the article that Harold will remain majority share holder. I am not trying to say there won't be some employee benefit to this plan. I just wouldn't start rushing to TMC to be an employee owner. I would assume the value of the shares is not going to go through the roof. I would also be surprised if someone at the driver or dispatch level would get much of a dividend. From what I know about these plans, it is sort of an addition or alternative to a normal 401-K. My wife had an ESOP plan at her employer before she "retired." Essentially it meant that their contribution/match to her 401-K was in the form of XYZ Bank stock. There are probably no voting rights that go along with employee stock and you have to sell it back to your employer when you leave.

 

I am no longer working for TMC but have several friends who still do. Don't quote me on this but this is the jist of what I got from them on the "employee owned" part. They will be given stocked based on their years of service as well as performance. The rub is that the stock that is given to you is worthless until you hit the 10 year mark. If you quit or get fired before that, you get zippo.
Hopefully current drivers will find this and inform everyone to the actual policy?

My personal thoughts? I think that Harold is thinking outside the box and putting this out there as a recruitment tool to get drivers. TMC is in reality a training company. A lot of people cut their teeth there and move on. Any program that will help retain these "new" drivers is worth it even if it is a gimmick.
Can't blame him and what better way do it than give the impression that you will be a part owner of the company,,,,,,even if it takes 10 years before you can collect on any stock that is given out.

 

I went thru a meeting about this at TMC, the only thing posted above that is true is the ESOP program rewards you with stock based on your years of service. There was nothing discussed about performance. If you screw up you still get fired or sent thru training. You begin to collect stock at your first year, but if you leave the company and decided to cash it in, you'll only be able to collect 20% of the actual worth of the stock. At 5 years you get 100% of the stock value. The stock is free to you, you don't pay anything out of your check for it, nor can you purchase additional stock such as in a 401k type program. Buy back is 1 yr 20% 2 yrs 40% 3 yrs 60% 4 yrs 80% 5 yrs 100%. 49% of the stock of TMC is held by the family while Harold placed 51% in a trust. The trust is independent and hires a independent accounting firm once a year to value the company. The shares are then valued based on the total worth of the company in any given year. If the family decides to sell any shares the ESOP program gets first buy at fair market value.

You pay no taxes on your shares until you cash them in, TMC buys them from you. At that point you will pay capital gains tax on the shares. One example they gave us was if you have 15 years at the company and cash your shares today, you'd receive just over $380,000.00 before taxes. If you had 30 years you'd receive just shy of $900,000.00. Not a bad deal. You have to be a employee at the time of ESOP taking effect to be eligible. They do have a program where, if you worked for TMC in the past and left on good terms you can return to the company and receive stock based on your prior years of service. i.e. If you worked for them for 5 years and left, you can come back and count that prior 5 years towards your stock.

Lets say your worked for them for 15 years, then you retire or quit the industry. You can choose to cash your stock in then or you can hold on to it until you feel like selling it back. Its up to you.

My personal feeling is that this is an incredibly generous gesture by the Annett family. Harold has always held the drivers of his company as partners in the success of TMC and while many companies say that, the Annett family has proven it with ESOP. His main wish is that TMC continue after his passing and remain intact with the same pride and culture its maintained since 1972.

That's pretty much all I can think of off the top of my head, hope the information helps.

 

Thanks for sharing. Good information. Unfortunately, I left about 2 weeks before the announcement of the new program and had 4 years in. Timing is everything I guess.

 

You can still go back, as I've read in your other posts you left to become a O/O. You could call them and find out if O/O's qualify for the same program as the returning drivers program. Doesn't hurt to ask I guess.