Bob's Red Mill is owned by its 700 employees. Its CEO says that is key to its success.

• Bob's Red Mill became employee-owned in 2020 with an Employee Stock Ownership Program or ESOP.
• CEO Trey Winthrop said when founder Bob Moore died, the ESOP helped with the transition.

When 94-year-old Bob Moore died in February, Bob's Red Mill not only lost its founder but also the face of the company, literally — he's on every package.

But in 2010, the natural foods company initiated a process that would help prepare it for Moore's eventual passing. Moore, who founded the whole-grain food company in 1978 and turned it into a global empire, decided to transfer ownership to its more than 700 employees. By 2020, Bob's Red Mill was entirely employee-owned.

"By becoming 100% employee-owned, we knew that when Bob passed that we would control our future," Trey Winthrop, the company's CEO since 2022, told Business Insider. "I didn't have to think about external problems. I got to focus internally on all the people here and how we were going to grieve together."

Moore said he frequently fended off large corporations that wanted to buy them out. But because of the employee-ownership program, Winthrop, who has worked at Bob's Red Mill for 17 years, said he did not have to worry about an external threat coming in and trying to buy up shares.

Bob's Red Mill is one of about 6,500 American companies that operate with an Employee Stock Ownership Plan, or ESOP, according to the National Center for Employee Ownership (NCEO). The largest majority employee-owned company in the US as of November is Publix, a Florida-based supermarket chain with more than 225,000 employees, according to the NCEO.

When an ESOP is formed, ownership shares are distributed to employees, giving them a financial stake in the success of the company. When an employee retires, the company buys back those shares at market price within a set number of years. ESOPs, which are technically retirement plans, are governed by some of the same laws that apply to 401(k) plans, according to The ESOP Association.

Though financial equity is important, Winthrop said it's not really the reason people join ESOPs, adding that the real benefit comes from how being employee-owned impacts the company culture.

"We own our jobs. We don't rent them," he said, calling it the company's "guiding principle."

ESOPs boost employee engagement and can lead to hefty payouts

Winthrop, who was at Bob's Red Mill long before the ESOP, said being employee-owned boosts employee engagement and retention. He said it creates a two-way street of communication, where the company can share financials with employees and workers are given a voice, in part through being active in committees.

"It's really getting people engaged culturally so they understand what success is, and then getting them juiced about that equity once they understand how they can grow it," he said.

As a CEO, Winthrop said he thinks being employee-owned actually makes his job easier as it creates a higher level of trust between him and other employees.

Having an ESOP does not prevent a company from being sold. But it can ensure that if the board does choose to sell it, for instance, employees will share in the profits, Winthrop said.

When Clif Bar sold to food giant Mondelez for $2.9 billion in 2022, the company was 20% employee-owned, which amounted to $580 million shared among 1,300 people — an average payout of $488,000 per employee.

But rather than think of an ESOP as a retirement tool, Winthrop said it's better thought of as an employee engagement tool. Still, he said it might not be for everyone.

"If you're trying to maximize your price when you're selling your company, an ESOP doesn't always pay top dollar," he said, but, "if you have employees that you believe in and you want them to be part of the financial success of their work and promote the middle class, then you should heavily look at being an ESOP."

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