Getting Rich by Giving Away the Store

Most employee ownership plans involve someone selling stock to an employee plan. Paul Merriman just gave it away. Merriman bought a tiny operation called HISCO, a Houston industrial supply company, in 1974 for $100,000. He believed other people deserved to be owners as well, so he started issuing new shares to an ESOP each year. The dilution has resulted in his now owning only 25% of the stock. Merriman says it was the smartest thing he's ever done. HISCO now has 158 employees and is worth $16 million. Last year alone, the average ESOP account statement increased $20,000 to $30,000.