Their (retirement) lives may depend on this company’s success
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Version 0 of 1. I turned 60 a week ago, and so retirement savings is on my mind. Truth be told, it has been on my mind for years. Those thoughts coincided with an interview I did last week with Michael Marcian Jr. and his dad, Michael Sr., president and chief executive, respectively, of Corporate Press in Lanham, Md. We were chatting about how my newspaper and its printing company were trying to negotiate the transition into the digital age. Father and son began to talk about their employee stock-ownership plan — known as an ESOP, an off-putting acronym if there ever was one. Ownership — whether it is of public stock, real estate or a private business — is the path toward wealth for any person. Employee stock ownership charts one avenue. “It motivates people to hustle and draws everybody in,” said Marcian Sr. “Everybody has a real interest in how well the company does.” They sure do. If the company does well — earns more profit — the value of Corporate Press goes up and the value of the shares for each of its 154 employees increases as well. The risk is that a bad year can send the company’s stock swooning. That’s one reason investment advisers will tell you not to put all your eggs in one basket by having retirement savings entirely in your company’s stock. Everyone has skin in the game at Corporate Press. Employees start to get shares after one full calendar year of employment. But they are not vested until year seven, which means if they leave before then, they get just a percentage of the shares. Each year, based on tenure and compensation, every employee gets more shares. Because Corporate Press is a private company and not publicly traded, its value is based on an annual appraisal from an independent firm. The stock price is pegged to that. The most recent appraisal valued the company, which has annual revenue of $30 million, at more than $10 million. There is a finite number of shares, so when someone retires or leaves, the company buys the shares back and they are eventually distributed to current employees. Historically, individual payouts range from around $250,000 to $700,000. “In the early stages of a person’s career, you might make more money elsewhere,” said Michael Sr. “But as you go through your career and the years of service mount up and wages go up, then all of a sudden you become very happy with the [stock plan] because you realize there is this money you are going to get that you did not have to save.” Corporate Press employees can still plow money into a tax-exempt 401(k) fund to diversify retirement risk. The company does not match the investment because of the employee stock plan. Together, the Marcians own between 15 and 20 percent of the shares. Michael Sr. said he’s not rich. But he sees the shares as a supplement to Social Security. “At 65, I’m still working,” he said. “That should tell you a little something.” One downside for the company is that it must use cash to buy back stock from departing employees every year. That prevents Corporate Press from deploying the cash as an investment in the business. “It restricts us in how aggressive we can grow the business because we have to make [stock plan] payments every year,” said Michael Jr. He said those payments can range from $350,000 to $1.2 million, not an insignificant sum for a business of that size. Michael Jr. said that he and his dad run the business pretty conservatively, with enough cash and investments to operate the company for a couple of years should there be another crash. There isn’t much debt. The company makes money, but not always. Corporate Press was started in 1951 in an upstairs office on K Street by a man named Ben French who acquired a small typesetting company. French wanted the company employees to control the firm after he retired, so he created the employee stock-ownership plan and gave Michael Sr. and two other French lieutenants a chance to collectively buy a third of the company, which was then valued at around $6 million. The other 70 percent was for the employees. Michael Sr. said that it brought management stability to the company. He signed a note with French to pay for his shares, interest included, out of his annual bonus. Michael Jr., 41, who has a business degree from the University of Maryland at College Park, started at Corporate Press in 1997, coming up through the ranks by doing jobs that others didn’t want to perform. “As the boss’s son, it’s valuable because it shows people you are willing to sweat,” he said. Michael Jr. has needed to adapt to the ascent of digital media, which has slammed his business the same way it has disrupted mine. He also had to weather the financial crisis, which caused longtime clients to bail. “From 2007 and into 2010, the business contracted 20 percent,” said Michael Jr. He made several key acquisitions over the next several years to diversify. “I was forced to think like an entrepreneur,” he said. He bought a Lanham-based newsletter and direct-mail business that injected $9 million into the top-line revenue. He bought another company that helps clients with marketing strategy through traditional printing, social media, e-mail and Web sites. A video job-interviewing site called JobOn, in which the company bought an interest, has helped to draw national clients. About 70 percent of the business comes from commercial printing and direct mail for a slew of clients, including sports teams, Fortune 500 firms, nonprofit organizations, trade associations and political groups. The rest of the revenue comes from signage, marketing strategy, digital publishing — and making sure those mailings reach clients’ target audience. Corporate Press is all over the Washington area. It makes about a third of the outdoor signs you see hanging from buildings or encircling a construction site. While it still has two printing plants, the division with the most potential is built around the growing need for database management. The team bridges the digital universe with the old-fashioned print world. For example, if someone visits a department store Web site and clicks on a pair of shoes, digital sleuths can find the person’s address. Within a week, that person will receive a catalogue, with the first eight pages full of shoes. That is called retargeting. Not everything has gone smoothly. The $5 million acquisition of a high-end printing firm has been difficult to integrate because some of its employees failed to grasp the urgency of expanding beyond the core printing business and into e-commerce. But Michael Jr. said the company must take risks to survive. “My job is to make sure it provides them with a reward, an increase in the value of the company and therefore the value of their stock,” he said. His employees are betting their retirements on it. |