When you call Modern Equipment Sales & Rental's branch in Havertown, Pa., to rent a skid-steer loader, whoever answers the phone is, in all likelihood, one of the company's owners. The same is true for the salesman in Wilmington, Del., the truck driver in Baltimore and the mechanic in Northfield, N.J.
"Everyone here is a shareholder," Modern Group president and CEO Dave Griffith says proudly.
In 1981, Modern Equipment parent Modern Group established an employee stock option plan. Under the terms of the ESOP, a percentage of the salary of every employee who worked more than 1,000 hours the previous year is put into the plan. Employees are allowed to invest that ESOP cash in mutual funds, other investment vehicles or, when it is available, Modern Group's privately held stock.
As of last count, employees controlled 34 percent of the company.
"The philosophy goes back to [company founder and current chairman of the board] Joe McEwen," Griffith says. "He founded the company with a very specific vision about sharing it with the employees. He always says, 'If we give something back to the employees, they will consistently do the right thing for the company and the customer.'"
Every six weeks, an officer of the company briefs employees - from the chairman to the receptionists - on the most recent financial numbers. Once a year, Griffith and executive vice president and chief financial officer George Wilkinson make a formal presentation to Modern Group's 580 employees. At those meetings, Wilkinson opens the books and breaks down where every dollar of Modern Group revenue went in the previous fiscal year.
"The ESOP keeps everybody motivated because we all have a piece of the company," says Al Pagliaro, Hightstown, N.J., branch manager. "It keeps all the employees active and interested in what the company is doing."
Says CFO Wilkinson: "It's not uncommon to hear someone at one of the branches say, 'Hey, don't leave the lights on over there if you're not using them. That's my money.'" -T.N.
