Oak Creek-based Eder Flag announced it will transition its company to 100 percent employee ownership through an Employee Stock Ownership Plan.
Eder, which has 170 employees, is the largest flag and flagpole manufacturer in the country. It distributes more than 20,000 products to more than 5,000 customers from its Oak Creek and Orlando, Florida facilities.
The company was founded in 1887 by the Eder family, and was acquired by Eugene Eder, son of one of the founders, in 1957. Eugene led the company for 50 years, and came up with the plan to pass Eder Flag along to its employees to retain its Oak Creek headquarters and demonstrate its commitment to employees.
After Eugene died in 2008, the company was put into an estate. The management of the company considered several options for future ownership, including selling to a competitor or private equity group, but wanted to assure there wouldn’t be any major changes in store. The management will remain in place and operations will continue as usual, the company said.
An ESOP can be useful when an employer wants to give back to employees and provide them an opportunity to participate in the upside of an organization. It can also provide tax savings to a business owner in the sale of the company, and allow the parties to transfer ownership tax-free. In addition, if the end owner of an S corporation is an ESOP, which is a qualified retirement plan and therefore tax exempt, the corporation does not pay taxes.
“This is Mr. Eder’s legacy. The employees at Eder Flag were an extension of his family and becoming an employee-owned company creates a legacy that reflects his commitment to maintain local ownership and keep the company in the Milwaukee area,” said Jodi Goglio, chief operations officer at Eder Flag.
“We’re thrilled to be able to honor Mr. Eder’s legacy, and to make this an employee-owned company,” said Timothy Ksobiech, chief financial officer. “As the company continues to grow, our employees will reap the rewards directly.”