A Memphis-based third-party logistics provider is now fully run by its employees.
Cornerstone Systems Inc. recently announced that it is 100% employee-owned. That news come after its founder and chairman, Rick Rodell, sold his remaining 51% stock to Cornerstone's Employee Stock Ownership Plan (ESOP) Trust in a transaction that closed Dec. 31, 2019.
"I'm very thankful someone came up with the ESOP," Rodell said, in a release. "It allowed me to reward the employees for all of their hard work, and let's not forget loyalty. There are many here who have worked with me for over 30 years. Let's face it, our employees are the ones our customers deal with."
Cornerstone officially became an ESOP in 2013 when Rodell sold 49% of his share to the newly created ESOP. Karen Cacaro, communications director for Cornerstone System, told the Memphis Business Journal that for the last seven years the company functioned as a 49% partial ESOP.
"The employees responded so positively, it validated that the remaining 51% should follow," Cacaro said. "The seven years gave us clarity that this was the right move. It strengthened our employees' commitment, alignment, and service level. It was the ultimate fulfillment of our purpose statement to provide a better place for people to work. It goes hand-in-hand with an ESOP."
According to the National Center for Employee Ownership, there are nearly 7,000 ESOP plans in the U.S., with 28 million employees participating. Cornerstone has a staff of about 200 people.
As long as a person has been employed by the company for a year — and worked 1,000 hours during that year — they are eligible to be part of the ESOP, according to Cacaro. She believes, as employee owners, there is now a vested interest by everyone in how the company performs.
"This allows us to have shares to allocate to employees for many years into the future," Cacaro said. "Further, it allows us to become an S corporation, which has significant tax benefits. Last and most important, it is a significant recruiting tool because we are able to provide a benefit that many other companies can't offer."
With service coverage spanning all of North America, Cornerstone Systems offers intermodal, railcar and railcar consolidation, truck brokerage, LTL, domestic transportation of U.S. imports and exports, container drayage, on-site logistics, warehousing and transloading services, and specialized shipments.
Cacaro said Cornerstone has placed an emphasis on growing in the areas of technology, truck brokerage, and its sales force this year. In 2019, Cornerstone grossed $309 million in annual revenue and is projected to slightly increase that this year at $326 million in annual revenue, according to Cacaro.