Modern Times Beer announced today (July 7) that it has transitioned to a 30 percent employee-owned company, with long-term plans to raise that number to 100 percent.
According to the announcement, "At only 4 years old, Modern Times has become the first brewery in the state of California to become employee-owned." In doing so, the fast-growing company follows the lead out-of-state craft breweries including Oregon's Deschutes Brewery, as well as Colorado's New Belgium Brewing and Left Hand Brewing.
Majority owner Jacob McKean was quoted in the announcement as saying, "This is my single proudest achievement as Founder & CEO of Modern Times." He also offered the move as "proof that a start-up brewery can compete and win in the craft beer market without selling out."
The announcement explains the move is, in part, "intended to help attract and retain exceptional talent." In a follow-up blog posted to the Modern Times website, McKean explains the shift to an employee stock ownership plan also creates a "massive tax benefit" and "gives us access to vastly more financing than we had before," which can be useful to a company that already has expansions to Encinitas, Anaheim, and downtown Los Angeles in the works.
Modern Times repurchased a portion of shares in the company from its original outside investors to free up the 30 percent equity; they will be managed by a trustee, Minneapolis-based Ventura ESOP Fiduciary Services. However, a couple of years remain before many employees actually become vested.
In an interview, McKean said that employees will be granted their shares at no cost once they've been with the company six years. Once vested, they will retain shares until they leave. "Employees will benefit primarily from the appreciation of their shares," McKean said. "As Modern Times is worth more, their shares are worth more. We will buy the shares back from them when they retire."
In his blog post, McKean added, "This is the biggest and most important step we can take towards living the values we espouse," including employee well-being, business ethics, and a collaborative "culture of ownership."
He concluded, "It ticked every box for us: achieving an outstanding return for our investors, maintaining our independence, rewarding the employees who have made our success possible, enhancing the collaborative culture that's so vital to the company, and creating a sustainable ownership structure that will replace me when I'm ready to move on."