Decline in business has MPD retirees upset

Messenger-Inquirer (Owensboro, KY)

Jan. 11--Business at Owensboro-based MPD Inc. has been down over the past two years.

"All but one of our businesses have been underperforming," Gary Braswell, the company's president, said Thursday.

And that caused MPD to only be able to pay a third of what it had planned to pay members of its Employee Stock Ownership Plan at the end of 2018.

That has retirees concerned, Charlie Schaut, who was the company's vice president of human resources from 2012 to mid-2017, said Thursday.

His duties included overseeing the ESOP.

There are currently more than 400 participants in the retirement plan.

"We have more retirees than current workers," Braswell said.

He said MPD currently has 339 employees around the world.

A total of 267 of them are in the United States and 170 of those are in Owensboro.

Schaut said, "Employees earn shares each year as the company pays off the initial loan required to establish the ESOP and acquire the shares from the previous owners. The earned shares are held in individual accounts for participants by a trustee -- First Bankers Trust Services -- and are payable to the employees in cash once they retire or terminate from the company."

The company pays the retirees the money owed them over a five-year period after their retirement, Braswell said.

The amount of stock allocated to an employee each year is based on the employee's income.

If an employee has $100,000 worth of stock, it would be paid over the five-year period in increments of about $20,000 a year.

"But this year," Schaut said, "the company is only paying a third of what is owed."

Braswell said MPD plans to pay the other two-thirds of what is owed as soon as it can.

"It is very, very important to me that they get their money," he said.

MPD was created in 1987, when a group of investors bought General Electric's Owensboro-based Microwave Products Division.

The ESOP was created 10 years later.

"Back then, 80 to 85 percent of our business was defense work," Braswell said. "Today, that's about 15 percent."

Today, three-fourths of the business is with law enforcement, he said.

That includes things like radar equipment, breath-alcohol testing equipment and in-car video and body cam equipment.

Cities, counties and states aren't spending as much on law enforcement as they were a few years ago, Braswell said.

MPD-owned FIC Corp., headquartered in Maryland, makes fuse holders for naval vessels.

It was the most successful of MPD's holdings last year, Braswell said.

He said MPD offers three retirement programs -- a defined benefits pension to people who joined the company before that program was frozen, a 401(k) program and the ESOP.

Schaut said, "When MPD acquired Kustom Signals Inc. a few years ago, they took on considerable debt to finance the purchase. Within a couple of years, KSI was not providing the revenue originally anticipated and other existing businesses were underperforming."

Braswell said MPD is not for sale and there are no plans to sell the employee-owned business.

The inability to pay the full amount owed to ESOP members will be corrected as soon as business improves, he said.

Schaut said, "The value of MPD's stock has fallen nearly 25 percent over the past two years due to the company's poor financial performance."

"Our stock is down from two years ago," Braswell said. "But it's still doing better since the ESOP was started than the S&P 500."

Schaut said the retirees are "prepared to take their efforts to the Department of Labor and the Internal Revenue Service."

MPD's companies include several subsidiaries, according to its website -- Owensboro-based MPD Components Inc., Owensboro-based MPH Industries, Owensboro-based CMI Inc., Wales-based Lion Laboratories Limited, Singapore-based MPD PTE LTD, Kansas-based Kustom Signals and Maryland-based FIC Corp.

The company also has employees in France, Braswell said.

According to the company's website, it received the Group Excellence Award by The ESOP Association's Ohio/Kentucky Chapter in 2001 and was honored as Company of the Year by the Ohio/Kentucky Chapter the following year.

Keith Lawrence, 270-691-7301, klawrence@messenger-inquirer.com

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