SPANISH FORK — Driving past one of Utah County’s Clegg Auto shops, you might easily assume it’s a run-of-the-mill auto shop.
But Clegg Auto stands out from other auto shops, and almost every other business in the country, with a unique business model that empowers and gives back to every employee, from maintenance staff to managers.
But the company’s history dates back to the 1950s, when Clegg Auto began as Clegg Car Care in Orem, said Kevin Clegg, CEO of Clegg Auto.
Eventually, Clegg’s uncle sold the business to his son and Clegg’s brother. While Clegg was then a full-time student, his brother suggested he return to the family business, which he did, albeit for a short time.
“We opened the Spanish Fork store in 1998, and it was our first store opening. After our first year, I got accepted into graduate school and left the company to get a master’s degree in organizational behavior. From there, I ended up working in the corporate world with large companies… working with them on how they organize and lead their teams and the results they get,” Clegg said.
In 2011, Clegg’s brother approached him again about returning to the business and Clegg agreed, on one condition.
“I said, ‘Let’s do it. But if we do, when we decide it’s time to go out, we’re going to have to go out to the employees. I’m not going to sell to anybody other than the employees if we’re building this together, because we’re taking all this time and getting to know our teams, and they’re sacrificing their time and effort and energy while we’re building this company. It just doesn’t seem right to me to sell it to anybody else,” Clegg said.
His brother was on board and in 2020 they took the business seriously. But instead of pulling out completely, they decided to stay on while evolving the business to an employee ownership trust model.
According to the nonprofit Project Equity, an employee ownership trust “ensures that employees have a share of profits, a voice in governance, and that the company’s mission – and its jobs – can be preserved for generations to come.”
Clegg and his brother chose not to move to an employee share plan – the most common form of employee ownership in the country – for a number of different reasons.
“ESOPs are governed by ERISA (Employee Retirement Income Security Act of 1974) and there are a lot of regulations. If you get an offer for your company that exceeds its value, then they may consider it in the best interest of every employee in the company to accept that offer and get bought out,” Clegg said. “At that point, you’re no longer an employee-owned company. You’re owned by the person who bought you out and literally everything you’ve built, everything you’ve worked for could be gone.”
In the summer of 2022, the company was placed under the control of a trust. This model also ensures that Clegg Auto will never be sold, even long after Clegg and his brother have passed away.
“It’s written in the bylaws and the trust agreement that everything goes to charity, so there’s no incentive for anyone to try to change what we do,” Clegg said, adding that the company already donates 10% of its profits to charity, which he said gives employees a sense of connection and impact in their communities.
It’s not just a theory. Employees feel a sense of community and connection within the company.
At present, the distribution of wealth is skewed. Instead of lifting many people out of the rut, there are fewer and fewer of them, and more and more wealth ends up in the hands of a few.
–Kevin Clegg, CEO of Clegg Auto
Cortney Allan has been working at Clegg Auto for two years as an assistant manager. She met Clegg two years ago and, having worked in the automotive industry since 2012, she knew immediately that she wanted to be part of what was being built.
“It’s always been very corporate, very… you’re a number, you know?” Allan said. “We’re a whole. When we look at the numbers from Provo or American Fork or the reviews, we’re like, ‘This is great.’ We’re all doing really well, but I think it’s because you take it very personally. You want to be the best. You want to be different from everybody else.”
That kind of companywide atmosphere has also paid off in terms of the bottom line. In the last fiscal year before the company switched to an employee-owned model, it was able to share $40,000 in profits with employees. After the first fiscal year under the new model, that figure increased tenfold, to $400,000, all without raising prices, something Clegg says he doesn’t want to do.
And while Clegg knows he runs his business in a capitalist society, he believes the model doesn’t pay enough attention to sustainability.
“If you look at what capitalism has done in our country, it’s done a lot of good. It’s helped a lot of people. But at a certain point, if you don’t make constant adjustments, things can go wrong,” Clegg said. “Right now, the distribution of wealth is skewed. Instead of moving things forward, there’s less and less wealth and more and more wealth in the hands of a few.”
Clegg said he hopes his family business can serve as an inspiration and success story for other companies in the region and across the country to consider moving to an employee ownership trust model, which is not as popular in the United States as it is in Europe, for example.
“In business schools, you hear about companies that are built to last, and most of them are built to be sold,” Clegg said. “In our structure, we can say … ‘We may not be traditional owners who build something to sell it and take the profits. But we are more of an owner-manager or we are in this for the long term. We want to be good stewards, take care of everybody.’”
