How Wawa, Gore-Tex won Senate help in JOBS bill
Carper, Toomey did companies' bidding
Wawa's chief executive-elect, Christopher T. Gheysens, will join US Sen. Tom Carper, D-Del., at a Wawa just below the Pennsylvania state line tomorrow morning to celebrate President Obama's signing of a bill that makes it easier for private companies like the Delaware County-based convenience-store chain to stay private.
Wawa and like-minded companies are cheering the JOBS Act, which, despite its name, isn’t a labor-hiring program, but a package of bills cutting back what Gheysens and others say are onerous business regulations, some of which were designed to protect investors from rip-offs following the Enron scandal of the early 2000s.
Sens. Pat Toomey, R-Pa., and Carper joined to sponsor one bill in the package, the Private Company Flexibility and Growth Act, which would lift the current limit on how many shareholders a company has to have, before it must report detailed financial data to the public and the Securities and Exchange Commission, from 500, to 2,000.
Sens. Pat Toomey, R-Pa., and Carper joined to sponsor one bill in the package, the Private Company Flexibility and Growth Act, which would lift the current limit on how many shareholders a company has to have, before it must report detailed financial data to the public and the Securities and Exchange Commission, from 500, to 2,000.
Wawa, controlled by descendants of its founding Wood family such as ex-Delaware First Lady Elise Wood du Pont; W.L. Gore & Co., based in Newark, Del., and owned by Gore family members such as U.S. Sen. Chris Coons, D-Del.; and family-owned, Rochester-based Wegmans Food Markets, currently spreading through Pennsylvania, hired former US Rep. Thomas Reynolds, R-NY, to lobby for the bill last year.
Gheysens, a past Wawa chief financial officer and former Deloitte accountant scheduled to take over as chief executive at Wawa when Howard Stoeckel retires at the end of this year, testified in Congress last December in favor of the bill.
Private companies like Wawa “can focus on long-term results,” instead of “Wall Street” expectations that pressure companies to make short-term layoffs instead of investing for the long term, Gheysens told Congress. But under current law, Wawa would, maybe within a decade, “be required to choose between becoming a public reporting company” or spend “as much as $40 million” on a reorganization to avoid having to go public, Gheyens told Congress.
Private companies like Wawa “can focus on long-term results,” instead of “Wall Street” expectations that pressure companies to make short-term layoffs instead of investing for the long term, Gheysens told Congress. But under current law, Wawa would, maybe within a decade, “be required to choose between becoming a public reporting company” or spend “as much as $40 million” on a reorganization to avoid having to go public, Gheyens told Congress.
In an interview, Gheysens told me Wawa already tells employees who participate in the company's employee stock-ownership plan about sales, earnings, dividends and other financial information. Government reporting requirements would force the company to add layers of compliance and accounting that would boost expenses without improving information, he said.
Gore also prefers to stay private so it can make long term plans and spend as it sees fit, spokesman Michael Ratchford told me. Sen. Coons, a former Gore lawyer and lobbyist and a stepson of Gore cofounder Robert Gore, signed on as one of the bill’s co-sponsors.
Coons was lead sponsor for a separate part of the JOBS package that would have exempted companies less than five years old, or with sales under $250 million, from having to comply with full terms of the Sarbanes-Oxley anti-fraud compliance certification law. The limit was later raised to $1 billion, exempting larger companies, in a final version sponsored by Carper, Toomey and U.S. Rep. John Carney, D-Del., among others.
Toomey's office named Phil Bell, CEO at Electro-Petroleum, Wayne; Todd Wallach, CEO of Molecular Detection, also in Wayne; and Jeff Hatfield, CEO of Vitae Pharmaceuticals, Fort Washington, among the small potential public-company owners and executives who encouraged him to back this bill.
Coons backed the SarbOx rollback at the suggestion of Delaware’s corporate bar and Delaware Secretary of State Jeff Bullock because it would likely increase the number of initial public stock offerings, which means more business for the state’s role as a corporate legal center, Coons spokesman Ian Koski told me.
Of course that contradicts the thrust of the private-companies part of the JOBS package, which, as Wawa’s Gheyens testified, reduces pressure on a company to go public.
But "different companies need different things," as Carper spokeswoman Emily Spain said, when I pointed this out.
And Washington’s not afraid of a little contradiction, when it’s passing legislation to make important constituents happy, this election year. (Revised)