The store aims at not only profiting, but also distributing its benefits to the employees behind its success.
Editor's note: This article was originally published on July 25, 2023. It has since been updated.
There have been a lot of discussions regarding the position of employees in a company's progress. Many people have raised issues with the concept of tipping as in their opinion, companies should pay their employees properly. Stewart's Shops seems to have taken this advice to heart and has gone one step ahead by making 175 employees literal millionaires by giving them a stake in the company, as reported by Your Tango. Stewart's aims at not only profiting themselves but also distributing their benefits with the reason behind their success - their loyal employees.
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Stewart's Shops is a northeastern chain of ice cream shops. They are a common presence at gas stations which has helped them to regularly churn out large revenues. The company has a unique package that allows one-third of the company to be owned by the employees. This option has aided 175 employees to turn themselves into millionaires with their sheer hard work. In order to have a stake in the company, the employees have to either work 500 hours in a quarter or 1000 hours in a year. Thereafter, they get an option to open an ESOP. ESOP stands for Employee Stock Ownership Plan.
After employees have opened their accounts in Employee Stock Ownership Plan, they would garner the role of 'partner'. This will encourage employees to work with more passion as they will have a vested interest in the corporation's success. If the company succeeds that will lead to more revenue. More revenue would imply an increased amount of investment in the account of the employees as time passes by. In a press release of 2020, the company explained the impact of the step, "Our employees are called Partners, and they are since they own over 40 percent of the company through their ESOP, which is 100 percent funded by the company for anyone working at least 1000 hours a year. After six years in the plan, a Partner’s balance is usually greater than a year’s pay. In April, our Partners received 17.5% of their 2019 gross pay into their ESOP."
The process occurring here which enables employees to make money is known as dividend payout. Dividend payout is the portion an individual receives from the profits the company made due to their investment. Therefore, the higher the amount invested the more the possibility of earning through Dividend payouts. This system has been mutually beneficial with the company making regular profits while employees garnering thousands of dollars in their accounts. As per the press release 2019 saw 90 partners becoming millionaires while that number jumped to 175 in 2020.
This incentive is beneficial to employees, especially in such trying times for the US economy. In this plan, the employees are also given the option to reinvest the dividends they have earned. In this way, the next payout will be even more in comparison to the present amount. President of Stewart's Shops, Gary Dake says “Even in these times, we have stayed the course; outside of our hardworking Partners, our stability has been our largest asset. Our ESOP plan is the best way to reward our Partners for their commitment and hard work which have been imperative to our stability and long-term success.”