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Natural Foods Merchandiser

Companies with a cause: Bob's Red Mill

In his 70th decade, Bob Moore’s focus turned to the future. Like many of the pioneering natural products entrepreneurs, Moore found himself at retirement age with no real succession plan for his company. Bob’s Red Mill Natural Foods, the whole-grain milling and manufacturing business he started with his wife and sons in 1974, had morphed into an $80 million company with 200-plus employees, a 325,000-square-foot headquarters in Milwaukie, Ore., and more than 400 SKUs ranging from steel-cut oatmeal to gluten-free biscuit mix.

Moore analyzed his options. Passing on the company to a family member wouldn’t work—his sons were busy running businesses of their own, and his eight grandchildren had different interests. He could follow the lead of many of his peers and sell his company to one of the brokers or large food manufacturers that had been calling four to five times each week with offers. But Moore viewed those types of sales as “acquisition and destruction. In some cases, they can be so detrimental to the company and so devastating to the employees,” he says. “I love my company and I love my employees. I couldn’t do that to them.”

So Moore chose the option that spoke to both his heart and his head. He decided to give Bob’s Red Mill to his workers—not only to perpetuate jobs and security, but also to keep the company growing. “It made sense that the employees who are critical to the success of the business are eventually going to have possession of it,” he says.

Experts believe employee ownership can be a savvy business decision. “An employee-owned firm should theoretically provide better customer service and higher productivity,” says Scott Van Winkle, managing partner with international investment firm Canaccord Adams.

Moore researched the best way to hand over Bob’s Red Mill to his workers and decided on an employee stock-ownership plan. Under an ESOP, all of the company’s stock is put into a retirement plan, and each of Bob’s 209 employees is vested in the plan after they’ve worked for the company for three years.

On Feb. 15, Moore’s 81st birthday, he signed the papers establishing the ESOP. He plans to remain president of the company until the ESOP is fully financed, which could take as long as 10 years, and then hand over day-to-day operations to his employees while staying on as chairman of the board.

Typically, a company funds an ESOP by taking out a loan for the value of the business and then paying it back, but Bob’s Red Mill is so successful that the company is able to act as its own lender. Moore says for the past six to seven years, sales have been growing at a yearly rate of 20 percent to 25 percent.

Moore attributes much of that success to empowered employees. “I think it’s important to share responsibility with your people so they can make decisions and run your company,” he says.

As for the future, “it would be fun to be a mouse and see where they take their company in 10, 15, 20 years,” Moore says. “I hope they’ll still be making whole grains and being successful.”

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