Sawbones Worldwide, an Island institution for more than three decades, was sold last week — but not to an out-of-state conglomerate or an off-shore consortium.
In a surprise move, president and CEO Foss Miller told more than 100 employees and their family members gathered at their annual Christmas party last week that they — the employees — are now the owners.
Miller, who founded the company in 1975, and his business partner Denzil Miller, have created an “employee stock ownership plan” or ESOP, which will gradually put his and his partner’s ownership shares into shares that each employee will own.
Instead of being a privately held company run by the president and his top management team, a board of directors will now oversee the company — similar to how a publicly traded company is run, but with employees as the recipients of the stock.
Foss Miller said that when he and his partner realized they wanted to consider selling the firm, which employs 135 people with an annual payroll of $6 million, they knew they wanted to keep the business on Vashon.
They found some interested parties. “But nobody we talked to was able to … put it down in writing that they’d not move it off the Island. … And that’s when we decided — how cool — let’s just sell it to the people who work here,” Miller said.
The move also provides considerable tax advantages to the company — incentives created by the federal government to encourage ESOPs.
Employees will receive shares based on how many years they’ve worked at the company. When they quit or retire, their shares are cashed out for them, providing funds for retirement, Miller said.
Norine Martinsen, the company’s chief financial officer, said the approach encourages efficiency and productivity — since the more profitable the company is, the better off its employees are. Companies with ESOPs are 15 to 16 percent more profitable.
Sawbones, known on the Island as The Bone Factory, has grown considerably in recent years. A few years ago, it added a second shift and recently completed a new 40,000-square-foot building. The company, which began by making a few bones for orthopedic surgeons to practice on, now makes thousands of bones as well as hearts, livers, lungs and ultrasound and endoscopy training supplies.
When Miller made the announcement at the Christmas party that the company had been sold, the room went silent. He then explained that he’d sold the company to the employees, who erupted in cheers. A video of the party is posted on YouTube.
The response has been overwhelmingly positive, Miller said. “Some people were just elated and so thankful. They didn’t really have a plan for their retirement. And now they’ve got something they can count on,” he said.
