As its first wave of employee-owners approach 100% vesting in autumn 2010, St. Louis-based Guarantee Electrical Co. is finding that its 2005 decision to launch an employee ownership transfer plan (EOTP) is paying dividends even greater than expected. In fact, the initiative has proven so invigorating to the financial and managerial underpinnings of the 107-year-old firm that it is looking to attract new merger partners from across the United States by using the prospect of employee ownership as a primary lure.

Guarantee ranks among the nation’s largest electrical contractors with 2008 revenues topping $156 million and regional offices in Denver and Granite City, Ill., plus on-going operations in California.The company has about 120 salaried employees and employs up to 1,000 electrical and communication craft workers at project peaks.

According to the company, its EOTP consists of two components: a key management stock purchase program (KMSPP) and an employee stock ownership plan (ESOP). Under the KMSPP, the company’s executive management team (EMT) recommends participants to its board of directors. In turn, the board approves all stock purchases. Every non-bargaining employee with a minimum of one year of service, working at least 1,000 hours annually, qualifies for inclusion in the ESOP. Stock is purchased using company contributions set as a percent of base salary. In 2008, Guarantee contributed 11.4% of each qualified employee’s salary to the stock purchase fund.

Currently, 17.5% of Guarantee stock is owned in the ESOP by salaried employees, while a group of executives and managers holds 56.5%. Retired and non-working family shareholders of the once 100% family-owned company hold the remaining 26%, compared to the 62% they held when the EOTP was launched in 2005. The goal is for the ESOP to hold 30% to 40% of the company’s shares by 2012, with key executives and managers owning the 60% to 70% balance.

In addition to its 2003 acquisition of Kimsey Electrical Contracting, Denver, and its 2004 purchase of St. Louis-based voice/data/video installer TEL-Vi Communications, Guarantee is scouting for additional mergers in 2009. It is targeting contractors with good reputations, annual revenues of $10 million or more, a solid history of performance, and established market positions.

“Our Kimsey and TEL-Vi mergers significantly broadened our managerial and engineering talent pools and have been consistently accretive to our bottom line," says Rick Oertli, president and CEO."Guarantee is a stronger organization today than it would be otherwise. The fact that we now offer a proven employee-ownership plan sweetens the deal for merger candidates concerned about the long-term future of team members who have contributed to their firm’s success.”