Use of Employee Buyout Association to Buy Profitable Subsidiary and Restructure Company as Democratic/ Co-op Style ESOP
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In 1985, the 66 employees of Republic Container, a subsidiary of LTV Steel, led by their local United Steelworkers union, purchased their company from its parent using an ESOP that was structured on a one-vote-per-person, basis, similar to a co-op. It allocated stock benefits on a relatively flat basis because it limited the amount of income on which stock was allocated to the highest hourly worker’s rate. The employees took a one-year wage adjustment of $1.25 per hour as their initial equity payment. After retirement of their original CEO, Mike Cable, the local union president became the CEO. The employee owners were successful in preserving good jobs in West Virginia for 15 years beyond the time that LTV sought to liquidate it. However, Republic Container was a casualty of the steel dumping crisis in the 1990s.