AAR has become employee-owned with a newly created Employee Ownership Trust (EOT) taking the majority shareholding.
The development is part of a move to further strengthen its performance, entrepreneurialism and innovation and pass on the company to the next generation of business leaders.
An EOT is an indirect form of employee ownership in which a trust holds a controlling stake – at least 51% - in a company on behalf of all of its employees and provides an incentive for owners to sell a controlling stake in their business.
AAR, the world’s first pitch consultancy service for clients and agencies founded by Lyndy Payne in 1975, was sold to Executive Chair Kerry Glazer, Managing Director Paul Phillips and Managing Partner Martin Jones in 1998.
Glazer, Phillips and Jones have sold a majority portion of their shares, along with a minor long-term shareholder and three AAR staff who were AAR Employee Option Scheme holders exercised their options and have become minor shareholders. The company has been independently valued at around £5 million.
An EOT has been formed which now has a majority holding of shares in the AAR on behalf of AAR staff, while Glazer, Phillips and Jones each retain a minority stake. A growth share scheme has also been created.
The EOT has two independent trustees who have joined the new AAR Board. Glazer is a Director and Chair of the Trust, providing continuity.
Kerry Glazer, Executive Chair of AAR, said: “Establishing an EOT allows AAR to retain its independence and, therefore, its impartiality, integrity, company values and consistency in the way it operates as a business.
“It makes it easy for the existing owners to bring in a new generation of AAR leadership - heralded by our new Chief Executive Officer, Victoria Fox - to incentivise and, over time, transition the business.
“What we have done is very much in keeping with the way in which AAR has always managed itself and it has allowed Paul, Martin and I to ensure succession and legacy of the business and a brand that we’ve worked hard to build.”
Victoria Fox, AAR CEO, said: “Trust is critical in this industry and in establishing an EOT, AAR is actively demonstrating its integrity as an organisation. True leadership is about recognising when you need to bring in new thinkers with fresh ideas to innovate and take your business forward.”
EOTs were introduced by the British government in the 2014 Finance Act as part of a strategy to promote employee ownership as a business model in the UK. Companies recently to set up EOTs include Richer Sounds and Aardman Animations.
In addition to tax incentives for the businesses to sell their shares, staff can benefit from receiving up to £3,600 of any annual bonus they receive tax-free.
Research has shown that employee-owned companies are more entrepreneurial, with staff more committed to the company and its success. They tend to deliver superior business performance and be more innovative, too – achieving this through consultation, information and responsibility sharing business-wide.