Room & Board Sets Up Employee Stock Ownership Plan, Giving Workers a Stake

On Thursday, Golden Valley-based Room & Board announced that it has adopted an employee stock ownership plan, or ESOP. The move will give the furniture retailer’s 1,100 employees a “financial stake in the company,” leaders said in a statement.

In an interview with TCB, Room & Board president and chief operating officer Bruce Champeau said that the company officially became employee owned on April 1 and communicated the news to employees via video last week.

Champeau said the change will give employees a sense of certainty going forward. He added that the company’s board and executive team “have a responsibility to make sure we set things up not only for current staff members, but also for future generations of Room & Board employees.”

Bruce Champeau, president and chief operating officer of Room & Board

Under the ESOP, all part- and full-time employees are eligible for a piece of ownership. The precise amount of ownership is determined by “a blend of tenure as well as compensation,” Champeau said. “We wanted to make sure that this was equitable to all of our staff, so we’ve come up with a system we think is going to be well received by the team.”

Room & Board will become one of the largest furniture retailers in the nation to become employee-owned, but it’s certainly not the only one. Green Bay, Wisconsin-based furniture maker Krueger International Inc. is also owned by its 3,000 employees, according to the National Center for Employee Ownership, a California nonprofit that tracks ESOPs across the country. Dublin, Georgia-based Farmers Home Furniture, which employs 2,700, is another worker-owned entity.

Meanwhile, Minnesota as a whole had 294 employee-owned organizations as of 2023. That’s up from 225 in 2021. Earlier this year, Maple Grove construction firm Meyer Contracting Inc. also flipped to an ESOP model.

For his part, Champeau said the move will enable a more entrepreneurial mindset among employees. “I firmly believe that when people take ownership of something, it also provides them a level of freedom to make decisions that are in the best interest of both the customer and the company,” he said. “That’s what we’ve always talked about here.”

Even before the shift to ESOP, Room & Board has for decades shared monthly financial results with every employee, Champeau noted. He’s been with the company for more than 30 years and said he “honestly can’t recall when we didn’t do that.” Champeau understands that not every company may want to share that precise level of financial data with employees, but his company’s leadership sees it as an imperative.

“People need to understand how you’re keeping score,” he said. “We’ve always believed in that. If they don’t know about our measures of success and how they impact the company, how else do they know they’re making a difference?”

Going forward, the flip to an ESOP model shouldn’t result in any big changes in Room & Board’s day-to-day operations. Champeau and other C-suite execs will remain on as members of the ESOP’s board of directors. The board also includes chief people officer Nancy Greatrix and chief financial officer Jean Sand.

“Over the past few years, we have explored every possible option for future ownership—from going public, to private equity, to non-profit ownership,” said Room & Board’s founder and chairman John Gabbert in a statement. “Becoming 100% employee-owned was the only option that allowed us to stay true to our business values of respect, accountability, transparency, and collaboration and most importantly, preserve our company culture. My goal has always been to take care of the people who have helped make the company successful and this decision is in the best interest of our staff members, vendor partners, and customers.”

Founded in Minnesota in 1980, Room & Board has evolved into a national retailer, with stores in a dozen states, plus Washington, D.C. Today, nearly 400 employees work in Minnesota.

The move to ESOP comes after Room & Board in October became a certified “B-Corp,” which is bestowed to for-profit businesses that meet specific environmental and transparency standards.

As seen in TCB magazine.