Vita Plus Corporation

5 BUSINESS VIEW MAGAZINE VOLUME 10, ISSUE 11 VI TA PLUS CORPORAT ION $200 million in 2008. Four years later, in 2012, that number climbed to $300 million. Seasoned business people know that the higher the annual sales you reach, the harder it gets to push past a certain point. Many companies experience what can only be described as a fiscal bottleneck, and for some companies, that can last a few years. A company’s strategies must yield exponential results within these years to break through that barrier. Vita Plus managed to do what so many others struggled to achieve because just last year, as of September 30, 2022, the company’s revenue shot up to an astounding $450 million. It’s safe to say that 2023’s report is eagerly awaited, especially by its principal shareholders, the employees. During the passing decades, Vita Plus employees certainly reaped massive rewards for their hard work. According to Chief Financial Officer Mark Miley, “We’ve had a tremendous return for our staff… the compounded [annual] rate of return [on the stock] is 23.81% over 36 years. If that’s not top decile performance, I don’t know what is,” Miley states, drawing attention to the fact that a core benefit of the company ESOP’s growth is the surplus of liquid assets it generates. “We ended up with a lot of cash in our ESOP,” Miley states. Specifically, in fiscal year 2000, when Vita Plus became an S-Corp., the resulting influx of money–a great thing overall–initially presented a unique issue the company had to overcome. However, Vita Plus soon found the solution to its problem in its employees. The Rise of the ESOP Employee As a legal requirement, an ESOP must be designed to invest “primarily” in qualifying employer securities, meaning at least 51% of its assets must be invested in said securities. So, due to the surplus of liquid assets, the company found it difficult to keep 51% or more of its ESOP value invested in employer securities because its assets kept growing! The solution came in the form of what Miley refers to as “mini-mergers,” a process by which the company strips money out of its ESOP and reinvests it elsewhere to get the total investment amount up to the 51% mark. Its first mini-merger was done in May 2005, which moved 53% of all employee ESOP account balances to their 401Ks. From there, employees could invest the money in their 401Ks at their discretion. This strategy proved an immediate success, as they could self direct a significant portion of their ESOP dollars to meet their individual investment objectives Since then, the company has repeated this practice four additional times for a total amount of $15.75 million that was moved from the ESOP to employee 401Ks. Over the years, thanks to these mini-mergers and the great returns Vita Plus sees on its stock after its annual appraisal process, 60%– 65% of its earnings are distributed to the employee-owners as S-Corp distributions. Regarding its appraisals, Vita Plus surely has its long-time partner, Sansome Street Appraisers, to thank, who have at times granted stock returns as high as 55.29%!