Caven workers praise stock ownership plan
CEO sees benefits in morale, employee retention

By Chris Leeds, Staff Reporter, Dallas Voice                           Reprinted with permission.

Caven Enterprises Incorporated, parent company of four nightclubs along Cedar Springs Road, recently went up for sale - to its employees, that is.

Caven Enterprises CEO Jack Polachek announced late last year that he would sell 35 percent of the company to an independent trust that would in turn offer it to Caven employees in the form of stock shares. The move has been popular with workers, according to employee spokesman Mark Kirby.

In the works for a year, the Caven Enterprises Incorporated Employee Stock Ownership Plan was set up as a retirement plan for workers, Polachek said. Kirby, who serves on the ESOP committee with fellow employees and representatives from upper and middle management, said the program truly benefits the employees.

"This actually encourages employees to stay at the corporation longer and take more pride in the company and the individual bars," the 29-year-old bartender said. "This way they can start planning for retirement. And should they decide to move on and cash out, they can take that money and invest it in another IRA or mutual fund and keep it rolling."

Polachek echoed Kirby, adding that employees will soon have a "say-so in policy and procedures."

The fact that only employees can accrue the stocks further solidifies their job security, because outside stockholders could be tempted to bring in different workers, Polachek said. "It sets a market up for me to sell my stock, rather than try to find a third party outside the company, which would jeopardize some of the employment of the long-time employees here."

According to Kirby, before the stock program, worker benefits were limited to health insurance. While employees appreciated the medical coverage, Kirby said that it was easy to make lots of money and save little for the future.

"We had talked about having a retirement-type fund so lots of employees didn't waste their money. It's very easy to make cash [from tips] and go out and spend it," Kirby said.

The stock program was offered to all employees who work at least 20 hours a week, and by 2005 each worker's portion will mature.

"We started everybody out at the same place, and they're on a five-year vesting schedule," Polachek said. "That means within five years they get certain percentages of the stock that they become vested in. Then after five years of continuous service, they're 100 percent vested in the stock that they have in their portfolio."

According to the CEO, each worker's stock is based the employee's salary, and if an employee opts to leave early, the value of his holding will be based on his employment beyond three years.

Kirby said the program makes a strong symbolic statement.

"It definitely says that Jack is concerned about the employee's happiness and futures," Kirby said. "We are probably one of the largest gay [companies] in the state, if not the country, and now being employee-owned, it puts us on the forefront in that we're a more solid and tighter company."

Today, nearly 10 million U.S. employees receive stock options, according to the National Center for Employee Stock Ownership, up tenfold since 1992.