Roberts Hawaii creates employee ownership plan
The company is now Hawaii's largest private employee-owned firm
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The owners of Roberts Hawaii Inc. are restructuring the 66-year-old company, making it the state's largest private employee-owned business.
The Iwamoto family, which has owned the tour operation since 1941, has created an Employee Stock Ownership Plan, known as an ESOP, to take a minority stake in the company. About 1,000 of its 1,400 workers are eligible for shares in the program.
The family will keep at least 51 percent of the shares to maintain control of the company, but wanted to reward long-time employees while divesting some of the family assets.
The Roberts ESOP, designed to be a retirement trust fund, is Hawaii's largest based on number of employees. Maui Divers of Hawaii Jewelry Ltd. is the second-largest isle ESOP, with more than 700 workers participating.
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Roberts Hawaii Inc. has become the state's largest private employee-owned business after owners transferred company stock to 1,000 of its workers.
The Iwamoto family, which has owned the business since 1941, created an Employee Stock Ownership Plan, known as an ESOP, to reward long-time employees while divesting some of the family assets.
The family will keep at least 51 percent of the shares, maintaining controlling interest in the ESOP, said Neil Takekawa, Roberts Hawaii's president, who ironically hasn't worked at the company long enough to qualify for the program.
Another 400 employees also do not yet qualify.
The ESOP, which was created as a retirement trust fund, is Hawaii's largest based on the number of employees. Maui Divers of Hawaii Jewelry Ltd. is second largest, with more than 700 workers participating in the program.
"ESOPs work very well for companies that are family owned. It basically gives them an opportunity to get some tax benefits and get some value for the company after all these years of working," Takekawa said.
He wouldn't disclose the value or percentage of stock in the ESOP, but said employees wouldn't have to pay out of pocket for the shares, which the company financed and purchased from the Iwamoto family.
The amount of stock employees receive is based on annual income. After six years they can liquidate the shares through a company buy-back program.
Robert Iwamoto Jr., Roberts Hawaii chairman and CEO, said the company considered multiple alternatives before deciding that an ESOP was the best way to keep the company locally owned and contribute to its growth.
"Our employees are a tre-mendous part of (the company's) achievements, and sharing ownership with them will not only reward their contribution, but also provide incentives for their continued dedication," Iwamoto said in a statement.
Hawaii has between 75 to 80 ESOP companies, ranging from small to large businesses, said Frieda Takaki, chairwoman of the national ESOP Association.
"ESOPs are what they consider an excellent exit strategy where owners may want to retire or sell out -- that's when most people consider doing this," Takaki said. "I think the owners wanted to begin retiring. I can't imagine why else they're doing it."
However, Takekawa said that Iwamoto has no plans of retiring soon, and the family also has no plans to take the company public.
ESOPs, which are more common among publicly-traded firms where it is easier to liquidate stock, function as an added incentive to attract workers in a tight labor market.
Eric Mais, professor and chairman of the Shidler College of Business' finance department at the University of Hawaii, said in the past stock options were reserved for top executives as compensation, but more businesses are starting to create ESOPs for mid-level managers and front-line workers.
"The secular trend is less cash compensation and more stock compensation," he said. "What we're seeing is more compensation for employees' performance."
Roberts Hawaii was started on Kauai by the late Robert Iwamoto Sr., who operated it until his death in 1983.
The 66-year-old company owns a fleet of more than 1,000 vehicles and operates sightseeing tours and school bus transportation on all four major islands, as well as dinner cruise sales and the Magic of Polynesia.