1929: Have We Got a Deal for You
If you’ve ever sold a home or a business, you know that it can be hard to find the right buyer… someone who truly appreciates the value of what you’re selling and wants to preserve and improve it for the future. That’s what Western Electric faced when trying to find a buyer for its distribution arm, which was spun off as Graybar in 1926.
No prospective buyers would agree to the terms set by Western Electric, so on January 1, 1929, employees bought Graybar Electric Company, Inc. for $9 million. That’s roughly $130 million today.
Initially, there was a $3 million down payment, financed by the sale of stock to Graybar employees. Western accepted $6 million of Graybar nonvoting preferred stock for the balance. The day the sale closed, Graybar became the largest employee-owned company in the nation.
Things were great . . . for 9 months. That’s when the stock market crashed and the Great Depression began. During the next few years, Graybar lost money for the first time. But optimism reigned supreme, with the company growing and adding new offices. Graybar got out of the consumer appliance business and more heavily into distribution. Most importantly for employees, the company continued to make dividend payments and maintained benefits for employees and retirees.
Employees could purchase shares of the company for $100 each, which was considered a bargain at the time. Graybar made it easy for employees to buy stock, offering a choice of payment plans that could stretch out up to five years. It was such a good deal that 1,700 of Graybar’s 2,300 employees purchased shares. (In 1939, the stock split five for one, which reduced the price to $20, and it has remained there ever since.)
In 1941, Graybar purchased the remaining outstanding shares of stock from Western Electric.
That year, the overall stock market was down 70 percent from its 1929 peak. Graybar common stock, though, had held its value, “not changing even a penny.” Since that time, shareholders have earned cash dividends of at least 10 percent every year, in addition to occasional stock dividends.
The opportunity to own Graybar stock is a privilege only available to Graybar employees and retirees. Employees at all levels of the organization can choose to become shareholders. From people in entry-level roles to Graybar’s senior executives, employee ownership creates a shared bond that has stood the test of time. As shareholders, many of Graybar’s retirees stay closely connected to the company, while they continue to earn cash and stock dividends into their retirement.
Because it’s employee-owned, everyone has a stake in the performance of the company, and everyone can work together toward common goals. Is it any wonder that Graybar has earned recognition as a top workplace in metropolitan areas across the United States?