Fireclay Tile is now Employee Owned!
Today's blog post comes from our CEO, Eric Edelson!
It is with tremendous joy that I share the news that Fireclay is taking our B Corp mission further and is now Employee Owned! We have had employee ownership since 2013, and today we are taking the step to ensure even more of Fireclay is owned by our 150-person Fireclay team so that they, too, can share in the growth of Fireclay financially. We issued a press release today with the details, and we celebrated as a team via Zoom last Friday.
With today’s announcement, we have created a new 23% Employee Stock Option Pool to add to the 14% already owned by both current and former team members. Each and every team member at Fireclay enjoys employee ownership, on top of fair, competitive wages, participation in our bonus plan, and generous benefits. While so many business headlines we read highlight companies raising money by selling ownership, we are doing the opposite and are buying ownership to enhance the ownership of our very own team members. In addition, Fireclay Tile has purchased its Aromas, CA factory location, meaning that every day our team shows up to work, they will be doing so on property that they are part-owners in.
An aerial view of our factory in Aromas:
Ownership is complex, and it almost always also involves money. Sadly, in the United States, less than 10% of the population have ownership in the organizations where they work. Certified Employee-Owned reports that there are 6,000 private enterprises with employee ownership totaling just 1.5M employee owners. Given that there are more than 300,000 private companies, the data is troubling. And in the Design industry, the one in which we operate, there are few examples of Employee Owned businesses.
Fireclay Tile’s Ownership History
Fireclay was started by four partners in 1986, including Paul Burns, the Founder of Fireclay. Over the years those partners left, and the ownership was consolidated under Paul. In 2009, when I partnered with Paul, I earned ownership in Fireclay via “sweat equity”, and in 2013 and 2015 we raised a total of $3.1M from outside investors, including Clif Bar affiliated Whiteroad Investments, along with 25 private investors, each contributing between $10K and $1M.
Founder, Paul Burns:
In 2013 we first introduced Employee Ownership via a stock option plan - initially 10% of the company. We increased this option pool in 2015, and entering 2020, our team, including both current and former team members, owned 14% of Fireclay. With today’s news, we’ve created a new 23% employee stock option pool which will take our Employee Ownership to over 37% over the next several years.
Why We Care
As a B Corp we strive to use Business as a Force for Good and ensure that we are living up to our Stakeholder philosophy. Employee Ownership is a critical piece of this. We know that employee ownership helps to increase sales, profitability, and retention compared to organizations absent employee ownership. In addition, employee owned companies are more likely to survive difficult periods. In a recent NYTimes OpEd, Joey Zwillinger, co-founder of Allbirds, and Leo E. Strine Jr., former chief justice of Delaware, pointed out that from 1979 to 2018, while worker productivity rose by 69.6 percent and the stock market grew by 2,200 percent, worker pay only rose 11.6%. The rich are getting more rich, while employees are staying economically stagnant. Employee ownership is absolutely a way to move the needle, and we are excited to see how far it can take us.
The results speak for themselves. At Fireclay, we’ve seen an 8x increase in revenues since creating our first stock option plan in April 2013. We have fantastic retention, industry leading profitability, and an authentic, mission driven brand that our clients reward us with mid-80s NPS. Rather than rely on more outside, dilutive equity financing, we plan to leverage our team’s GANAS, or desire, to fuel our growth!
How You Can Create An Ownership Culture
Ownership at Fireclay has never been fixed, and only during roughly 7 of our 34-year existence has ownership been consolidated under one person. That said, ownership is tricky. It involves emotions, money, tax, legal work and more. This complexity is typically the excuse for not modifying ownership over time, or for not providing employee ownership opportunities. This complexity is something we embrace, as we firmly believe in the power of equity for both shareholder value creation as well as wealth creation for team members and all stakeholders. Those who help create value should receive value!
What’s Next for Us
Transparency is critical, so we have relied on both our B Corp certification as well as our new Employee Owned-Certification to ensure that we are forthcoming in our commitment to our people.
While we’ve enjoyed employee ownership for more than 7 years, one area we have failed in is to best educate our team about what it means to be an owner. This is something we will be working on, and we are fortunate to have a full-time Learning and & Development Specialist and strong People team to help. We also plan to rely more on outside partners, such as the Certified Employee-Owned organization.
Does this mean our ownership is now fixed going forward? Absolutely not. In our 35 year existence, ownership has changed many times, and that is ok. We still aim to grow this company for a successful sale to an organization committed to our B Corp values and one that can help further accelerate our growth. And the best part is that when that happens, the very people who helped ensure we got there will - hopefully - see significant success for it.
I am personally so thrilled to partner with our incredible 150 team members. Joining Fireclay and partnering with Paul Burns 12 years ago was a blessing, and it is rewarding to know that Paul and his family got a big win for his 35 years of unwavering dedication to Fireclay. The company is in great hands with our new owners, and I am so excited to see what the next 12 years looks like!
Tile to the People!