Thousands of workers at US Sugar thought they were getting a good deal when the company shelved their pension plan and gave them stock for their retirement instead. They had a heady sense of controlling their own destiny as they became the company’s biggest shareholders, said Vic McCorvey, a former farm manager there.
“It was always stressed to me, as manager of that 20,000-acre [8,094 hectare] farm, that the better you do, the higher your stock will be and the more retirement you could get,” McCorvey said. “That’s why I worked six and seven days a week, 14 hours a day,” slogging through wet and buggy cane fields, doing whatever it took.
Now that many US Sugar workers are reaching retirement age, though, the company has been cashing them out of the retirement plan at a much lower price than an outside investor offered for their shares.
Some former US Sugar employees belatedly learned of the offer and have filed a lawsuit that accuses company insiders of cheating them out of money due to them. The worker-owners, meanwhile, have been shut out of information about the company’s finances and unable to challenge management’s moves or vote because their shares are held through a retirement plan, not directly.
What has happened at US Sugar could happen at many other companies because of a type of retirement plan that proliferated in the 1980s after key members of Congress took an interest in “worker ownership” as a way to improve productivity.
Thousands of companies, large and small, embraced the ensuing tax benefits by creating employee stock ownership plans (ESOPs). US Sugar, the largest producer of cane sugar in the US, took its stock off the public market in the transaction that created its ESOP in 1983.
Nearly 95 percent of the country’s 10,000 ESOPs are at privately held companies like US Sugar. Because their shares are not publicly traded, there is no agreed-upon market price for the stock. So workers cash out their shares without knowing what their value would be on the open market.
The former employees accuse US Sugar insiders — descendants of the industrialist Charles Stewart Mott — of scheming to enrich themselves by buying workers’ shares back on the cheap. They say “the principal actor” is William White, the company’s longtime chairman, who is married to Mott’s granddaughter. They also say he improperly exerted his influence as chairman of the Charles Stewart Mott Foundation, whose mission is to advance human rights and fight poverty and which holds a big stake in US Sugar.
“They robbed us,” said Loretta Weeks, who worked in US Sugar’s lab, testing sucrose levels in cane juice. “It’s like the last 15 years we were working for nothing.”
US Sugar said in a statement that the lawsuit had no merit and that the company would vigorously contest it, but it did not respond to any of the specific allegations. White has declined to comment.
Through his lawyer, White denied that he had improperly exerted control over the US Sugar board, or that the Mott Foundation had anything to do with the decision not to sell to the outside investor. The lawyer, H. Douglas Hinson, also said that White and the Mott Foundation had no role in deciding what price employees received for their stock because the price was set in an independent appraisal.