Construction is a tough business. It’s often hard and dangerous work. It’s also competitive, with hours that make it hard to have a personal life. Marc Hazen learned this when his wife was scheduled to give birth to a third child, a son, via C-section.
“He planned it for a Thursday so he could take Thursday and Friday off to be with her,” remembers his brother Chad. The following week, he learned his pay was docked for those two days. That was a “turning point,” says his brother. It ultimately motivated him to get his own construction license and start Hazen Construction in New Smyrna Beach in 2001.
A year later, Marc was joined by his brother, an experienced contractor with an MBA, to keep track of the money side. It has been a very successful partnership.
Focusing on site preparation and utility infrastructure work, the company has completed more than 700 projects in the Volusia-Flagler area, Chad says, including the Daytona International Speedway renovation, the Esplanade along Beach Drive, and the Amazon distribution center, to name a few.
What about the ‘having a life’ thing?
Twenty-five years later, keeping in mind Marc’s early experience, the brothers made a big decision. In December, they converted Hazen LLC from a limited partnership to a stock-owned corporation, an entity that will ultimately be owned entirely by the company’s employees. The transfer will be made via an “employee-owned stock ownership plan,” also known as an ESOP.
Chad says the primary motivation for the ESOP was succession planning and “the desire not to work indefinitely at the expense of enjoying life,” he said. “We have seen too many people wait too long to retire and miss out on experiences they hoped to enjoy.”
The ESOP allows the brothers to remain involved during the transition to employee ownership while providing a “meaningful retirement benefit to employees at no cost to them,” he explained. “As long as the company performs well, everyone benefits.”
It’s also a great option for employees, he said.
“Each employee of Hazen Construction is a trusted team member,” he said. “We want our employees to feel that they ‘own and operate’ their own business, which fosters tremendous pride resulting from owning a stake in the company.”
The transaction closed on December 31, but hasn’t been widely publicized.
What’s an ESOP, and should workers be worried?
ESOPs generally get good marks from retirement experts. The National Center for Employee Ownership reports that they help with employee retention, company performance, and, more importantly to the worker, often result in a serious jump in retirement assets.
The downside, the ESOP only works if the underlying asset, the company, is performing well. If the stock goes off a cliff, and that’s the only asset in your portfolio, there goes your retirement. However, the ESOP need not be the only retirement option. Workers might be wise to put some money toward IRAs or other plans.
As for the nuts and bolts of how this works, there are currently 1 million shares owned by the ESOP “trust,” which acts as an intermediary and is the company’s largest shareholder. Over time, the “trustee” will allocate shares to employees.
That process should wind down in about seven years, though it’s tough to be precise due to changing economic conditions. Employees already have a year of proceeds. They don’t have to pay anything to participate in the plan. Taxes on accrued assets are deferred
Twenty-five years later, who would have thought?
It has been a long and steady climb for the brothers. And there were obstacles. When Marc first got his construction license, his old employer, the company that docked him for taking two days off to be with his wife, wasn’t pleased.
They fired him.
At the time, he had three young children and a stay-at-home wife, his brother recalls. He borrowed $5,000 from a family friend to get by while hustling for work, doing jobs during the day and handling office work at night, but it soon became clear this wasn’t working.
“Around the same time, I was planning to start my own general contracting company,” says Chad. “One night, while watching football at Marc’s house, we agreed that I would come on board to manage the administrative side while Marc focused on field operations.”
Marc Hazen never imagined back then what the company would become.
“Twenty-five years ago, my only goal was to provide for my family and build a company committed to doing business the right way,” said. “I never imagined the company would grow to this level. The success Chad and I see today is a reflection of the people who believed in the vision, helped along the way, and continue to work beside us every day.”
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