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EMPLOYEE-OWNED. Seen above, the Custom Data Solutions, Inc. have decided to switch their ownership policy so employees can own 80 percent of the stock, while the owners will retain 20 percent. The process took about seven to eight momths to work out, said President and COO Michael Nudi.

(Observer photo by Chris Gray)

Local company celebrates
ownership change

Employees given
stock ownership plan

by CHRIS GRAY
Observer Staff Writer

      Custom Data Solutions has changed its ownership structure so employees can get a piece of the action.
       President and Chief Operating Officer Michael Nudi and Executive Vice President Denise Fullerton arranged what is known as an Employee Stock Ownership Plan and Trust (ESOP), which has allowed employees to acquire 80 percent of the company as of Aug. 15.
       Custom Data Solutions, located on S. Main Street and Durham, has provided data collection services to the snack food and beverage industry for 25 years. This helps clients to create better marketing plans and discover what products are successful or not. Some of their clients include Hershey, Pepsi Co., and Kellogg.
       To celebrate the change, the company held a "ESOP Kick-Off" party on Oct. 5, with a barbecue lunch provided by Blazin' Bob's BBQ.
       "(The ESOP) is a great opportunity for acquiring the company and at the same time providing employees with a long-term retirement benefit," Nudi said.
       An ESOP is an employee benefit plan designed to invest in employer stock. To set one up, a business establishes a trust and makes tax-deductible contributions to it. Employees are usually given a share of the stock after working for a number of years, or make it available for purchase at any time.
       Stock bought by the ESOP is put into accounts for individual employees based on relative pay or a formula. Nudi said the employees contribute zero dollars to it, as it is funded by the company.
       "As the 80 portion of shares become available for distribution, the employees will derive percentage ownership based on individual compensation," he said. "They never physically take the shares, they own a stake in the percentage."
       This allows for employees to have a direct and vested interest in the company, basically turning employees into stockholders. It also provides for long-term retirement benefits, much like a 401(k), Nudi said. To be eligible, however, they must be 21 years old.
       Employees will begin to see the shares at the end of this year.
       "Ideally, as they continue to earn shares, the value of the company is also going to increase, so when it comes time for retirement they can then present their shares back to the trust, and the trust will pay the amount in cash," he said.
       The disadvantage of an ESOP has been seen with companies like Enron, where they lost a significant portion of their retirement savings by investing too much into their 401(k) and stock.
       With this development, Nudi and Fullerton will own 20 percent of the company and will continue to manage it on a daily basis.
       "I think (the employees) have been very excited," he said. "This is an opportunity for them to share ideas on how to make us more efficient."
       One such employee is Technical Services Manager Dan DeLong. He has been with the company for 17 years, and looks forward to staying with it for many more years.
       "It's an exciting change, I think it's added a lot of enthusiasm for the whole staff and give it some incentive to work a little bit harder," he said.
       Keith Kaczynski, 21, also believed it was an important decision for the company, saying it gives a motive for him to stay. He previously worked for the company for four years, left for a period and came back a month ago. He currently works in operations.
       "I think it's a good idea, it's the next step for the company," he said. "It's moving toward the company running itself better."