Stewart's Shops Owners to Sell Stake to Employees
SARATOGA SPRINGS, N.Y. — The owners of Stewart's Shops are making changes as part of their succession plans for the privately owned convenience store chain. The Dake family will sell its 60% stake in the company to employees over the next 20 years.
Stewart's employees currently own 40% of the company through its employee stock ownership plan (ESOP). The Dake family's move to sell its shares to the ESOP is part of a plan to put the future of Stewart's Shops in the hands of people who will preserve its culture long-term, Gary and Bill Drake shared with the Albany Business Review.
"If we sold out [to someone else], they'd change everything," Bill Dake told the news outlet.
The shift has long been on the agenda, according to a company spokesperson.
"A decision of this kind was going to be coming some day," Robin Cooper told the Times Union. "Change is different, even when it's positive."
Stewart's Shops President Gary Dake and his father Bill Dake, who serves as chairman of the company's board of directors, have also identified their successors for company leadership, who are likely to come from outside the family. Company veteran Chad Kiesow was named chief operating officer earlier this year and has reportedly taken on more of Gary's operational responsibilities.
By selling their stake to the ESOP, the Dakes are adding to their culture of promoting from within and empowering employees to be proactive.
[Read more: Stewart's Shops Contributes $19M to Employee Stock Ownership Plan]
"[We're] trying to build that culture through the ESOP where the senior management team feels like they're owners enough that they aren't afraid to act. Because you look at the dumb stuff that people even in public corporations do, it's usually risk aversion. Because, 'If I do what everybody else did, nobody can criticize me,'" Gary Dake told the Albany Business Review. "Having the guts to say, 'Everybody's going right, we're going to go left,' is really hard to do, but ownership helps you do that."
Gary Dake acknowledged that they would stand to make more money if they followed the industry trend of consolidation and sold to a larger company, but noted that doing so could endanger both Stewart's $9 million of annual charitable contributions and the jobs of around 700 people who work at the business's dairy plant and home office, which would likely be seen as unnecessary assets.
The ownership change is planned to be gradual enough that the company continues running the same way throughout the process. To ensure stability, the sale has a provision that the Dake family maintains board seat control until ESOP ownership reaches 90%.
Once the shift is complete, Stewart's Shops will still have a C-suite and board of directors, but the increasing ownership of the ESOP will give it greater shareholder voting power.
Saratoga Springs-based Stewart's Shops operates more than 345 c-stores across 31 counties across upstate New York and southern Vermont.