The Steinhafel family has sold all of its stock in Steinhafels Furniture to an employee stock ownership plan (ESOP), the Pewaukee-based retailer announced Tuesday.
The move makes the company 100% employee-owned, although it remains a family-led company with Andrew Steinhafel serving as president.
“Each time our family has transitioned the business to a new generation, we have tried to balance doing what's right for our associates with ensuring the long-term health of the company,” said Gary Steinhafel, who recently relinquished the president role to Andrew. “Our news today is about securing the future of Steinhafels for all of us for many years to come. Steinhafels is more than just a business to us. It is our family legacy. Deciding to move forward as an employee-owned company helps to ensure that that legacy continues into the future.”
Andrew Steinhafel said day-to-day operations will remain the same but the company’s success will now be more directly tied to its associates. In an ESOP, employees are granted shares of the company on annual basis. The shares vest on an annual basis and have a price tied to the success of the company.
“We believe that becoming an employee-owned company allows us to leverage our greatest strength, and that is our valued associates. Being part of an employee-owned company means that our associates will benefit directly from the company’s continued success,” Andrew Steinhafel said.
Andrew Steinhafel will lead the company with support from Gary Steinhafel, chief operating officer Mark Steinhafel and chief financial officer Ellen Steinhafel-Lappe. The company also has an executive team that includes Fred Schweinert, director of stores, John Haas, director of distribution, Jessica Stark, director of merchandising, Chad Dern, director of marketing, and Andrea Kokott, director of human resources.
Andrew Steinhafel said the company had been working on the ownership transition over the last six to nine months. While the retail industry can tend to have higher employee turnover than other sectors, he said the company tends to benefit from higher employee retention given its more professionalized sales environment.
The company is also hoping the benefit of an ownership stake will help improve employee and recruitment. Steinhafel said other ESOP companies the family spoke with have seen improvement on those metrics after making the transition.
"It is a real benefit to the employees," he said.
Steinhafel said that given the company's size - it currently has more than 550 employees and 16 locations - the options for a transition were limited.
"The family ownership was certainly on the table, but unfortunately we're a little bit a victim of our own success because its just a very difficult thing to transition the company when it gets to our size," Steinhafel said.
He pointed out that there have been recent examples of furniture retailers selling to private equity or investment firms and quickly running into financial trouble.
"That really was never an option we considered that heavily," Steinhafel said.
That left the ESOP option the company announced Tuesday.
"It's good for the family, it's good for the employees and, frankly, we think it gives the company the best shot at continuing to thrive for the next 87 years," Steinhafel said.