When Bob Whalen became president and CEO of HB McClure back in 2008, the employees were nervous. He was taking over from the grandson of Herbert Bassett McClure, who had founded the Harrisburg, Pennsylvania, heating, ventilation and air-conditioning firm in 1914. The company, which serves both commercial and residential customers, had been profitable for a century. But Whalen says it wasn't running as well as it could. "At the time, our culture could best be described as focusing on the customer first," he says.
Whalen, who had agreed to buy the company through an extended compensation deal he had struck with retiring CEO Bob McClure, shifted gears to devote his attention to the company's employees, and about two years into his tenure as CEO, he made a radical decision. Instead of completing his acquisition of the company, he persuaded a reluctant board in 2010 to approve a sale to employees at a valuation of $4.6 million, using an Employee Stock Ownership Plan (ESOP).
"I wanted to instill an ownership mentality in my employees," he says. "The board thought I was crazy."
The results have been anything but. Revenue has surged from $25 million in 2010, the year the ESOP went through, to $160 million in 2018. Whalen expects sales to climb to $200 million in 2019.
A share of the growth has been organic, he says, and the rest came through 15 acquisitions of regional competitors. In the meantime, any nervousness among employees has been erased by great financial returns. The value of company stock has shot up from $2.78 in 2010 to $40.55 last year, and Whalen expects it to reach $58 when the 2018 number crunching is done. HB McClure's headcount has grown from 200 when Whalen took over as boss, to 940.
How does Whalen feel about his decision to forgo owning the company in favor of an ESOP? "I could absolutely not be happier," he says. "And I think the employees are thrilled."