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Robert's Hawaii employees get stake in company

By Michelle Baran

Robert's Hawaii is giving employees a piece of the family pie.

The family-run, Honolulu-based tour operator is transferring 43.5% of the company to its 1,405 employees in the form of an Employee Stock Ownership Plan.

Under the plan, CEO Robert Iwamoto Jr. and his partners, most of whom are family members, will cede partial ownership to the employees.

Neil Takekawa, the company's president, will continue in his role.

"Our employees are very appreciative to receive this added benefit and incentive, and that's creating a strong positive feeling," said Takekawa. "It's a benefit for helping Robert's Hawaii become the state's leading transportation and entertainment company, and it is an incentive for each of us to look at our jobs as an owner ... and always looking to increase the value of the company in the years ahead."

According to New York-based Corporate Solutions Group, an investment banking firm that designed and helped implement the ESOP, the draw for Robert's Hawaii is healthy tax benefits and greater employee loyalty.

"This is a great investment for the employees," said Alex Meshechok, managing director of Corporate Solutions.

According to Meshechok, employees do not pay into the ESOP, which was created on Jan. 1 and formally announced to the employees last week.

When employees leave the company or retire, they can sell their share back to the company. However, payment can only be made after the ESOP loan is fully paid, which will be in six years. Assuming the company continues to grow, the employees stand to profit. (If the company declares bankruptcy, the employees net zero.)

Consequently, employees have a vested interest in contributing to the growth of the company, according to Meshechok.

"It's a big trend in family-run businesses," he said, adding that ESOPs enable families to maintain control of their businesses while sharing its growth potential with employees, rather than being forced to sell it to another company or private equity group.

Though Robert's Hawaii does not release its earnings, Meshechok said that Corporate Solutions generally helps create ESOPs for clients that have annual earnings before tax and interest of between $5 million and $50 million.

Iwamoto's father, Robert Iwamoto Sr., founded Robert's Hawaii in 1941. Today, the company operates diverse services on Hawaii's four largest islands, including tours and transportation.