Transferring ownership to its employees makes Sullivan Tire Co. Inc. an even stronger company, says Paul Sullivan, the dealership’s vice president of marketing.
On Oct. 31, the Sullivan family, which has owned by Norwell, Mass-based firm – one of the biggest tire dealerships in the country, according to the 2023 MTD 100 – for nearly 70 years, turned the reins over to their nearly 1,500 employees via a new employee stock ownership plan (ESOP).
In a recent statement, Sullivan Tire officials said the ESOP "will ensure the legacy, brand and family culture of Sullivan Tire will remain as it began, putting their employees at the forefront and keeping the company true to its brand identity of treating everyone as if they are a member of the family."
As part of the ESOP, Robert Sullivan and Paul will remain with the company in their current roles, while Joe Zaccheo will continue as president and CEO of Sullivan Tire. Robert, who was MTD’s Tire Dealer of the Year Award recipient in 2012, is the dealership’s chairman.
Formation of the ESOP was a “proactive” move, rather than a reactive one, Paul recently told MTD. “We’re not in any defensive posture at all. We have very little debt. We have a great name, a great customer base and we’re still growing in all channels, which is quite rare. We see nothing but blue skies ahead.”
The ESOP also reinforces the Sullivan clan's “employees-first” philosophy, which Paul said stretches back to Sullivan Tire's founding. “In the last couple of years, there's been an awful lot of consolidation in the tire industry. We had people – including (our) employees - calling us and saying, ‘What about Sullivan? Are we going to be stable? What’s the future for me here?’ That was a big, big concern. We came back to the same answer: it’s all about your people.”
He also conceded that members of Sullivan Tire’s pre-ESOP ownership team “are getting up there and what’s important to us is preserving the brand of Sullivan Tire and recognizing our employees who helped us get there – the ones who are doing it each and every day. They demonstrate an awful lot of care," which has resulted in the company's "tremendous customer base that we’re most fortunate to have.
"We’re also an integral part of each community we service," said Paul. "We’re kind of old-fashioned, in that respect. We’re on the little league field, we’re in the church bulletins and we're supporting the fire and police departments and high schools and all the non-profits that do wonderful work in helping people who are less fortunate. We're excited about the future. We have some wonderful plans going forward."
Zaccheo told MTD that the ESOP will help with employee retention, plus recruitment of new workers. The ESOP “is in addition to the 401(k) and profit sharing that we currently have. It costs the employee nothing.”
All Sullivan Tire employees were automatically enrolled in the ESOP when it went into effect, according to Joe. “There’s a six-year vesting scale, so after six years, you’ll be fully vested. If you were hear for 20 years, you were immediately vested at 20%.
"This is a tremendous thing for recruitment and retention. It's a great, effective tool for ownership succession (and) allows an opportunity for our employees to share in – and benefit from – our growth. It’s an additional retirement benefit. And there are some tax benefits that the company’s going to enjoy, too, because were going to be an S-Corporation. The only shareholder is the ESOP.”