During a party this weekend, leaders at Hi Nabor Supermarket told employees they sold the company, not to an outside owner, but to the workers themselves.
Hi Nabor Supermarket has been jointly owned by nine siblings of the Crifasi family. But that changed in late March, when the company sold itself to an employee stock ownership plan. The sale is retroactive to January 2020.
"We told them we were selling the store at first, then that we were selling it to them and they got really excited about it," said Jim Crifasi, president of Hi Nabor. "We plan to make sure we transition it to people who keep moving the business forward. It will keep the Hi Nabor name going."
Hi Nabor hopes to start construction in 2018 on a new grocery store at the intersection of La. 16 and Magnolia Beach Road in Denham Springs.
At first, employees were in shock, he said. Even one day after the announcement there's been a change in the attitude of workers.
"It's their store now," he said. "They are just thrilled about it."
Crifasi said he was skeptical of the idea, suggested by a local succession planning expert.
"When I first heard about it, I thought it was a crazy idea. But the more you listen to it, the more you realize it's the perfect plan for us. Not just for the family but for our employees," he said.
The employee stock ownership plan controls 100% of Hi Nabor. Because the action is retroactive, it enabled the company to pre-fund the retirement benefit for eligible employees. The employee-owned plan is a retirement compensation tool for workers, in addition to a 401K plan. Each year, eligible employees who are at least 18 years old and have worked 1,000 hours are allocated shares based on salary. When the money is taken out at retirement by the employee owners, that's when taxes are taken out.
The company can save money on taxes and use it to invest in workers and infrastructure. Employee-owned corporations which use stock plans don't pay federal income tax since it's what is known as a 'pass through' entity.
"This helps us facilitate expansion," Crifasi said about the restructuring and lack of tax burden. "All that money goes back into the business."
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Appleton, Wisconsin-based ESOP Partners is the third-party administrator for the supermarket's employee owned plan. The plan is overseen by a trustee, Dominic Agresta, who represents the employee which then votes on the proposed board of directors.
Major decisions such as store openings will still be made by existing management and the five-member board of directors.
Hi Nabor was co-founded in 1963 by brothers Sam and Francis Crifasi with a 5,000 square foot location on Winbourne Avenue in North Baton Rouge.
Since then, that flagship store has grown to 30,000 square feet. A second store on Jones Creek Road opened in the 1980s and its Florida Boulevard location opened in 2014 as a relocation of its Drusilla Shopping Center location. Hi Nabor now has 250 employees across three locations and could add dozens more when the Denham Springs store opens. The company has been sorting out details around local wetlands.
In 2014, Sam Crifasi died of cancer. Francis Crifasi died in January 2020.
Most of the Crifasi children are still active in the day-to-day operations of the business. But as they look to retire and transition out of the company, the new structure enables them to do so smoothly.
Family members will get shares based on compensation just like everyone else.
Jim Crifasi, now 66, has worked at the supermarket since he was 15 years old and has been there for five decades. He expects to keep working at the store for at least another 10 years.
The company has been navigating the coronavirus pandemic while remaining open as an essential business. That means incentivizing staff by paying time and half for regular work hours between March and July 2020 so even while business was brisk, expenses were higher. The new ownership structure makes the company more competitive for talent, Crifasi said. It doesn't cost workers anything to participate and ownership stakes depend on employee salary.
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There are thousands of employee stock ownership plan companies across the nation and dozens in Louisiana.
Lakeland, Florida-based Publix Supermarkets, which has nearly 200,000 workers, is the largest employee-owned business in the country. Other supermarkets such as Lufkin, Texas-based Brookshire Brothers and Harp's Food stores in Springdale, Arkansas are also employee owned through the same structure. Ambulance provider Acadian Companies in Lafayette transitioned to an employee-owned business in the 1990s as did Baton Rouge-based John H. Carter and Automation and Control Specialists.
The average participant in an employee stock ownership program in the U.S. has $129,521 in their accounts, according to ESOP Partners. Most of the plans have been around since the 1990s.
"Employee ownership is transforming businesses by creating a perpetual owner," said Jason Wellman, director of ownership culture at ESOP Partners. "We have this silver tsunami where a lot of older individuals who are looking to retire after COVID as an ESOP essentially allows individuals to sell without a buyer and get paid fair market value for your business to transition out. Meanwhile it's truly taking care of the low to middle income worker, it's part of your benefits package and it becomes a tremendous bucket of wealth."