Bryn Griffiths (from left), Doug Tuttrup, CEO Fred Foster and Tong Vang stand in the lobby of Electronic Theatre Controls headquarters in Middleton. Foster and the other co-owners are giving 33% of the company to employees over the next 10 years, with the possibility of more after that. Credit: Andy Manis / for the Journal Sentinel

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The first hint was a holiday note telling Electronic Theatre Controls Inc.'s nearly 900 U.S.-based employees to take stock of a good year. Next came the Birkenstocks, a pair for each worker. And finally, at a company meeting, Chief Executive Officer Fred Foster delivered the real prize: actual shares of company stock.

Forty years after founding ETC, Foster said he and his co-owners are giving 33% of the company to employees over the next 10 years — and maybe even more after that.

"It's very believable that in decades the employees would have a controlling interest in the company," said Foster.

Middleton-based ETC manufactures lighting and rigging technology for entertainment and architectural purposes.

Tong Vang, a team leader in an area that assembles parts for fixtures, was shocked by Foster's gifts of stocks. "Then I was happy," she said. The employees will receive the shares on top of all of the other benefits they already have.

Foster said his desire to do an employee stock ownership plan, or ESOP, was kindled during years of watching competitors being sold over and over to different corporate owners or venture capital firms that either could not stanch the outflow of good employees or laid people off.

"This terrifies us," Foster said. "There were a lot of companies about our age started by rock 'n' rollers or people with a dream of doing something, then the partners wanted to cash out and they sold to a conglomerate that just lost the plot."

Along with Foster and his wife, Susan, there are two other ETC owners: co-founder Gary Bewick and Bob Gilson of Gilson Inc., a Madison maker of instruments for the pharmaceutical and biotech industries. To a person, the owners don't define shareholder value as the most money in their pockets or the biggest estates, Foster said.

"We define it as ETC being independent and thriving in 100 years," he said.

ETC is not disclosing what that 33% of the company is worth. But after recently completing the best first quarter in its history, executives say it is on track to beat its 2016 revenue projection of $250 million.

Every year for the next 10, the owners will sell 10% of the stock they have allocated to an ESOP, a retirement plan of sorts that buys, holds and sells company stock for the benefit of the employees, providing them with an ownership stake in the company.

"The reason ETC has been so successful is that our senior leadership has their hearts in the right place," said Doug Tuttrup, a senior account specialist at ETC who works with Disney, Universal and other customers. "There are many decisions made here with the heart first, then the head."

There are about 6,800 ESOPs in the U.S., with about 200 in Wisconsin, said Aaron Juckett, president and founder of ESOP Partners, an Appleton firm that helped ETC's owners with their plan. The average Wisconsin ESOP company has been in place for 19 years and is 66% employee-owned, he said.

ETC approached Juckett about the possibility of doing an ESOP after evaluating many alternatives, he said. To do an ESOP, a company has to be doing well and have enough financial resources, Juckett said. It is also important to have an ownership culture, something ETC already had in place, he said.

"It seems like a company that was employee-owned already because we all feel so strongly about the product and our fellow employees and the customers," said Bryn Griffiths, an IT business analyst at ETC.

The ESOP is a way to recognize that and reward employees' contributions, Foster said.

All of ETC's U.S. employees will be enrolled in the ESOP. When shares are distributed, half will be allocated equally across the employee ranks; the other half will be allocated based on pay levels. New hires will qualify to participate after one year, and the stock will take five years to vest to the point where employees can sell. They will be required to sell their shares back to the company when they leave. The 150 or so employees in ETC's international offices will be offered equivalent pension plans that meet their countries' requirements.

ETC's owners could make bigger profits if they moved manufacturing to China, said John Robison, a partner at the law firm of Quarles & Brady who represents the company. Or they could gives themselves a big payday by selling the entire company. But in an era where U.S. jobs continue to go overseas, they've chosen to balance their own profits with the well-being of others around them, he said.

"This is what it takes; it takes owners to stand up and say, 'I'm doing well enough, and what's more important to me is that my employees and the community are taken care of,'" Robison said. "That's a courageous stand."