Mainebiz Special Editions

V O L . X X X N O. X X I V § 2 O C T O B E R 2 1 , 2 0 2 4 12 M aine's business community is well-acquainted with the con- cept of employee-owned businesses, with the first one recorded more than four decades ago. The concept of the Employee Stock Ownership Plan has been around longer than that. e first one was established by a San Francisco lawyer, Lewis Kelso, in 1956 as a way for a newspaper group in the Bay Area to transition owner- ship from the two principals to man- agers and employees of the company, according to the Rutgers University Institute for the Study of Employee Ownership and Profit Sharing. e first ESOP established in Maine was that of Pittsfield-based Cianbro, Maine's largest construc- tion firm. Cianbro, founded by four Cianchette brothers in 1949, by the early 1960s the company had an estab- lished policy of sharing profits with employees in the form of a Christ- mas bonus. "By the mid-1970s, they felt some- thing more formal was needed in which the employees would have ownership," Lynn Cianchette said in a Cianbro history published by the Maine State Chamber of Commerce. "So Ken [Cianchette] went to D.C. to learn about ESOPs." At the time, ESOPs were still uncommon in the construction indus- try, but the firm went ahead with set- ting up an ESOP, in 1979. By 2004, the ESOP was 100% employee-owned. "Personally, I think it's the big- gest legacy they left behind because it does two things: the employees that have ownership of the company tend to have more responsibility for what they do because they know, 'is is my company and the decisions I make are going to impact me and every- body else,'" Lynn Cianchette said in the history. "And during profitable years they financially benefit from that … I think it's been many years since Cianbro has not had a profit- able year. So it's a great program." If you take a look at the list of Maine's largest ESOPs, in the back of this publication, you'll see that, while Cianbro indicated it was unusual for a construction company to have an ESOP in the 1970s, it's quite common now. At least a third of the ESOPs on the Mainebiz list are construction-related. e largest on the list has 900 Maine employees and the fewest has eight employees. A recent convert While Cianbro is Maine's long- standing ESOP, the most recent to convert is Penobscot General Con- tractors, which just made its shift to an ESOP structure in July. Penobscot General Contractors has its roots in the Rockport-based Penobscot Co., which was founded in 1970 by Dave Mazaroff. e firm was acquired by Clay Maker and Jon DiCentes in the summer of 2021. Today, they serve as co-presidents. In the past four years, the com- pany has grown rapidly. At the time the firm was acquired, sales revenue was in the range of $5 million to $8 million, Maker told Mainebiz. In 2023, revenue hit $70 million and the firm is on track to record $90 million in sales this year. Over that time, the workforce has grown from five employees to 31, Maker told Mainebiz at the time of the announcement. Penobscot General Contractors' notable projects include the Armature at Hanover Works, a Reveler devel- opment in Portland's West Bayside neighborhood with 171 apartments. e firm developed the "twin towers" in Falmouth, commercial buildings that bookend the Falmouth Shopping Center. Further north on U.S. Route 1, the company is finishing the Shops at Falmouth and, behind it, the Wyeth, which will have 43 condos. Maker said the firm has eight active projects and 500 housing units under construction. For the conversion to an ESOP, Penobscot General Contractors worked with a Maine firm, Bellview Associates, which is led by CEO Susan Scherbel. (Bellview itself is employee-owned.) e ESOP structure allows employ- ees to become owners, offering a direct stake in Penobscot General Contrac- tors' future growth and success. e firm said the shift reinforces "PGC's mission to create a supportive and col- laborative environment, where every team member is empowered to con- tribute to the company's continued achievements." "e decision to become an ESOP company reflects our belief that the strength of Penobscot General Con- tractors lies in the dedication and expertise of our employees," Maker said when the firm announced the change. "By giving our team the opportu- nity to share in the company's suc- cess, we are fostering a culture of ownership, accountability, and shared responsibility that will drive us for- ward into the future," he added. A challenge worth tackling Another construction-related firm that made the shift to an ESOP struc- ture is Haley Ward Inc., a Bangor- based engineering and consulting firm. e firm, which was founded in 1978 and adopted an ESOP structure in 2020, faced a number of obstacles in making the shift. "From our perspective, there are several perceived and real challenges to converting companies to a 100% ESOP structure," said CEO Denis St. Peter. He cites several factors to be mind- ful about: • e significant cost of the con- version and planning for the ongo- ing compliance processes; • e timecommitment from the Employee owned and operated How an ESOP works and what's in it for the employees B y P e t e r V a n A l l e n P ROV I D E D P H O T O / C O U R T E S Y O F P E N O B S C O T G E N E R A L C O N T R A C T O R S Clay Maker and Jon DiCentes, co-presidents of Penobscot General Contractors, the latest Maine company to convert to ESOP ownership.

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