Rubber meets the road: Sullivan Tire announces plan to give employees stock ownership

HYANNIS — For Paul and Robert Sullivan Jr., the succession plan for Sullivan Tire and Auto Service was never about the money.

On Nov. 6, the company, with locations in Falmouth, Hyannis, Sagamore, Sandwich and Wareham, announced a new employee stock ownership plan that will turn over ownership of the 68-year-old, family-owned company to its employees.

That succession plan was kicked into high gear about two years ago, according to Paul Sullivan, vice president of marketing. After four of the largest tire sellers in the region and country were acquired, rumors started circulating about Sullivan Tire. It was about the time Goodyear paid $2.8 billion to acquire Cooper Tires in 2022. Rumors about what could happen to Sullivan Tire began to impact employees, he said in a telephone interview Wednesday.

“We got calls from private equity firms and large companies offering us greener pastures, so to speak,” he said. “But we weren’t about to turn our backs on our employees.”

Sullivan Tire was one of the largest family-owned tire companies in the country, Sullivan said. Now it’s one of the largest employee stock ownership plan-owned businesses in New England. The company has 1,481 employees, and 43 families have at least two members working for the company.

There are 79 retail locations, 17 commercial truck centers and 14 wholesale distribution satellite locations. The company owns more than 40 of its locations. Two truck tire retread plants, two LiftWorks facilities, and five distribution centers round out Sullivan Tire's kingdom which stretches from Maine and New Hampshire through Massachusetts into Connecticut and Rhode Island.

Paul Sullivan credits his father, Bob Sullivan Sr., with setting the example. The elder Sullivan worked for a major tire company in the mid-1950s. He received news that a layoff was coming, and he’d have to let three employees go. When he saw a small tire business for sale on his way home, he inquired about it. It was a small shop whose owner had recently died.

He talked it over with his wife. She asked, "Who will pay for the kids’ shoes?" Paul recounted. At the time, the Sullivans had seven children. Three more would join them in the coming years. The husband told his wife they would find a way. The next day he gave his notice and Washburn Tire d/b/a Bob Sullivan & Sons was born. Sullivan brought those three employees with him to the new business.

“That’s how it began and that’s how it's going to end – caring about people,” Paul Sullivan said.

Sullivan wouldn’t say how much money it cost to put the employee stock ownership plan into effect. They had to pay a consultant, an adviser to help manage the program, and a firm to handle the initial valuation of the company and the annual updates required. They had to take out a loan to buy out family members' equity in the business.

Sullivan didn’t say how much the company could have made had they sold to another firm, other than say it was a “huge amount.”

“It wasn’t going to be about the money,” Sullivan said. “There’s no tougher job than raising a family these days. We want to be genuine. We want to ensure that our community and customers will be served as always.”

There is a six-year vesting schedule for Sullivan Tire employees to become 100% fully vested as owners, Sullivan said. Prairie Capital Advisors will determine the market value annually. Plan participants will earn a percentage of shares based on their compensation level. Existing 401Ks will remain in effect.

Employees will be able to redeem their vested shares when they retire, at age 65 or later. Employees who leave before age 65 could elect to have their balances rolled into another retirement plan.

“There is no burden in terms of cost to the employees,” Sullivan said.

Sullivan said the business decision based on caring for people was foundational.

"We want our employees to grow their own lives, buy homes, save for their kids’ education," he said.

Robert and Paul will continue to serve on the Board of Directors as chairman of the board and vice chairman respectively. The management team will remain the same, led by CEO Joseph Zaccheo.

Denise Coffey writes about tires, business and tourism. Contact her at dcoffey@capecodonline.com.

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This article originally appeared on Cape Cod Times: Sullivan Tire employees given chance to share ownership in company