Page 12 - 74752_NSAA_LowRes

Human Resources

EMPLOYEE STOCK OWNERSHIP PLANS

An Option for Succession Planning, Reducing Taxes,
& Enhancing Staff Retirement Savings

BY COLIN BANE

AT THE NSAA EASTERN Winter Conference in January 2016, help lead the growth of the resort into the 21st century
when representatives from Massanutten Resort announced and beyond.
that the ski area and its parent company Great Eastern After a series of payment installments spread across 22
Resort Corp. in Virginia’s Shenandoah Valley had become years, in September 2015 the ESOP arranged to purchase the
a 100-percent employee-owned company, the news was a last of the remaining stock owned by Hammer and the heirs
surprise. Massanutten is one of only a handful of ski areas of Lambert, who died in 2007.
known to have made the transition to an Employee Stock “Every one of our employees begins participating in
Ownership Program, or ESOP. Given the advantages of the plan after working one hour and earns a year of vesting
ESOPs, though, more privately owned ski areas may soon once they work 1,000 hours in a calendar year,” Waterbury
be following suit. said. “Employees become 20 percent vested in their plan
In fact, the move toward full ESOP ownership at benefits once they earn two years of vesting, and they
Massanutten began more than two decades prior, in 1993, become fully vested after earning six years of vesting. So,
when owners Dice Hammer and Jim Lambert established we’re really rewarding employees who stick with us, and I
the ESOP as a long-term succession plan to transfer own- think it’s also a major driver behind our growth.”
ership of the resort to its employees. According to Tom That growth has been exceptional (“perhaps ten-fold”)
Waterbury, vice president and chief financial officer for over the last two decades in terms of new and improved facil-
Great Eastern Resort Corp, there were a lot of good reasons ities at Massanutten along with new real estate construction,
for making the transition. Waterbury said. “I expect we’ll continue to see even more
“It was a tax-advantageous way for the owners of the growth now that it’s fully owned by the ESOP because every-
organization to gradually sell their interest over time while body here is motivated to see it succeed spectacularly,” he added.
still being involved in the operations and still being able to
participate in the growth and management of the company,” enny Hess, the ski area general manager at Massanutten
Waterbury said. “At the same time it provided our staff K Resort and an NSAA board member, says crossing that
with a retirement plan and ownership stake. It was great for mark into full employee ownership hasn’t made much of a dif-
employee retention and for creating an ownership culture ference in day-to-day operations since the ESOP had owned
across the company.” a majority stake for many years, but it felt like a momentous
Choosing the ESOP route instead of selling the resort occasion all the same.
to an outside company allowed Hammer and Lambert “When the ESOP bought out the remaining 14 or 15
to access some short-term liquidity from their invest- percent at the end of 2015, there was this wild moment of
ments in Massanutten—which they purchased in 1983 realization,” Hess said. “I remember thinking, ‘Daggone, the
for $3 million in a bankruptcy sale and then developed employees own the entire thing now! That’s pretty special.’ For
extensively—while retaining control of the company. me personally, since I’ve reached a certain age and tenure with
The ESOP trust also enabled them to offer a meaningful the company, now it’s real and it’s a big deal. I’ll be able to
retirement plan by giving every employee a qualified own- take a substantial amount out and divest when I’m ready to.”
ership stake in the company, incentivizing vested staff to Hess had already been working at the resort for six years

10 | NSAA JOURNAL | CONVENTION 2017