Marine Technology Inc. (MTI) founder Randy Scism has sold his Wentzville, MO, to his employees by setting up an Employee Stock Ownership Plan (ESOP), he announced this morning. MTI, builder of luxury center consoles and high-speed catamarans, is a major leader in the performance boating market.

Scism told Speedboat that he has worked out a deal to stay on as President of the muscleboat manufacturer for a minimum three years, with unlimited one-year add-ons, after which he will retire and his daughter, company vice president Taylor Scism, will take his place as president.

Scism founded MTI in 1999, scaling the peaks of outrageousness with his world-class catamaran line, which set a entirely new set of standards in the marine industry. MTI has always operated with an awareness of limitless possibilities, and has emerged a high-performance leader of stratospheric proportions. In 2012, Scism reinvented the company by introducing the outboard-powered MTI V42 center console to enormous success, eventually adding V50 and V57 models to the lineup as well. In addition, MTI has been a consistent dominator on the offshore racing front with boats like Team CRC (which won the Offshore Super Series Championship in Cat Extreme class in 2006, and bagged the kilo record at 160.98 mph). Current MTIs in competition include several 390XRs in 450R Factory Stock class, as well as the 48' MTI XINSURANCE/Good Boy Vodka in Class 1.

"When you do an ESOP, they don't give you as much as you would if you did a retail sale, but it's considered a retirement for the employees," Scism explains. Under IRS standards, a company is categorized as a C Corporation by default. Companies under S Corporation have adopted special tax status, allowing them some tax advantages. "Right now we've made MTI a C Corp. But come January, it converts back to an S Corp." Once that happens, the company never pays taxes again—neither federal nor state.  

"So instead of giving half your money to Uncle Sam every year, it stays in the company, and that's how they fund the purchase of the company," Scism says. "But it doesn't cost an employee a dime, and it doesn't really impact your cash flow because you're doing it with tax money. The government is covering it. Now, when they retire, as they withdraw the money, they'll pay the income tax, so it grows like a 401k, tax free, but it's an investment. So I'll get to give back to the people who got us here. It's a tremendous win-win for them, and it's good for me as well. I won't get as much up front, but I don't care. It's a way for me to make sure the company keeps the mindset we have now and continues on indefinitely. If we sell to somebody else, they're going to cut this and change that. They'd be looking at dollars rather than people."

Taylor Scism told Speedboat that this ESOP arrangement is similar to deals struck with QuikTrip gas retailers and Hy-Vee grocery stores, which are also employee-owned. "It's got a 98% success rate," Randy Scism adds. "Typically, when your employees own the company, you get a 10% to 15% boost in performance, because now they're all in the game. They're invested."

Scism told Speedboat that this plan has been in the works for nearly two years.

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