Professional Documents
Culture Documents
Innside TPI Winter 2014
Innside TPI Winter 2014
A game changer!
TPIHospitality becomes a
100% employee owned company
Tom Torgerson communicates that employee ownership is not too good to be true!
Hello to all of you associates that make up the TPI Hospitality team. We have so much going
on out of the normal this year; however with all of that we can never lose sight of the
importance of taking care of our guests. Always, we at TPI need to take care of our guests,
and for the TPI Corporate team, YOU are our guests. And in turn, you need to take care of
your guests, our CUSTOMERS. If we continually do this, everyone is a WINNER. At TPI, we
like to use the phrase, We believe in win-win-win outcomes. Whenever that gets out of
balance and one or two losses are inserted into that scenario, no one wins, not even the one
that thinks they are winner.
Tom Torgerson
Chief Executive Officer
TPI Hospitality
In taking care of YOU, TPI corporates guests, we have been working overtime and we hope
you are beginning to see the results of this. We restructured our non-management
compensation plan and benefits plan this summer to better compensate you for the extra hard
work you do, day in and day out, in taking care of your guests, who are all of our
CUSTOMERS. We are finalizing the plans for the ownership of TPI Hospitality to transition
from me to an Employee Stock Option Plan (ESOP) whereby you, all the associates of TPI,
will directly benefit from the future success of TPI. An ESOP can be complicated and requires
more explanation for sure.
Over the period of time that I have participated in ownership of TPI, we have seen the company grow by 13 to 14 times in size
from what it was 20+ years ago. During that period of growing, we built strong systems and relationships. Systems that we
developed over the years and operate today make us one of the most organized and sophisticated hospitality companies in
our industry. Our relationships with franchisors, lenders, capital partners, land owners, contractors, third party venders, etc.,
have been based upon trust and consistent delivery of expectations. In addition to the strong systems and relationships we
have built together, we have also built a strong balance sheet. When you bring these three things together; strong systems,
strong relationships and a strong balance sheet, the last item that is essential to light this organization on fire is YOU. We are
not missing you, but we want to take YOU to an entirely different level than you have ever thought you could perform at. What
if all of a sudden on January 1, 2015, you became an owner of TPI Hospitality? Well, that is exactly what is going to happen!
On January 1, 2015, YOU become 100% owners of TPI. There will exist a highly regulated ownership structure called an
Employee Stock Ownership Plan (ESOP) that is administered by the federal labor department under a law called ERISA.
ERISA stands for Employee Retirement Income Security Act. It has a lot of similarities to a 401K plan, yet is different. It is
designed to be a long-term retirement benefit for you and the value of that retirement funding is based upon the growth and
appreciation of TPI Hospitality during the time you are employed. Based upon the growth of TPI Hospitality, your ownership
share at retirement or departure from the company, will be bought back from you over five years, one payment per year. A
significant difference between a 401-k plan and your TPI ESOP is that you do not invest your money into the ESOP, your
ownership interest in TPI will be given to you. There exists specific criteria and minimum requirements for you to receive these
long term benefits and my summary is only that, a brief summary. Bottom line is my personal participation in the growth of TPI
from an ownership standpoint ceases on January 1st and our growth going forward all goes to the benefit of YOU, the
associates of TPIexcuse me, owners of TPI.
We are extremely optimistic about the future of TPI and feel it is in its best position in its history to grow and maximize its value
going forward. In recent town hall meetings, I told a little story for purposes of comparing and contrasting TPI when I bought
it, versus TPI when you buy it. Back in the early 90s, it was I, along with my mother and one brother who purchased TPI. We
were financed by the seller, my father, much the same as your purchase will be financed by me. However, there is a huge
difference from back in the early 90s, when we did not have any working capital. Working capital can be defined as cash on
hand to fund payrolls, mortgage payments and operating costs on a monthly and annual cycle. In order to pay our bills on
time, we obtained a loan from a local bank for $350,000 and as security for that loan we gave the bank titles to our vehicles,
jewelry to place in the bank vault, and interests in our houses. Over time we were able to pay that loan off. In stark contrast
to that early beginning, YOU, the new owners of TPI, will have a war chest of cash in the checking account way above and
beyond any needs for working capital. We intend to put that extra cash to work by investing in new properties to help grow
your value in TPI.
continued on page 22...
Through the years, TPI has gone through some very exciting changes and some significant
challenges as well. Whatever chapter we were in at the time, good or bad, we found a way
to leverage our condition to create a stronger and better company. As you read this
newsletter, it will be clear to you that we are on the doorstep of the single greatest change in
our history as we transition the company into a 100% Employee Owned Company. This, in
and of itself, is outstanding news for each of us. The magnitude of this change is further
highlighted by the fact that we will be in the top 1% of all ESOPs in the country in terms of
size. In addition, TPI is poised to become the largest 100% employee owned hospitality
company in the entire nation!
Becoming an ESOP will require a change in perspective by everyone. As of the first of the
year we will own TPI Hospitality, as Tom transfers his interests to us. Simply put, we will
have the opportunity on a daily basis to individually profit from this change in the form of a
retirement account that will grow in value as we grow the value of TPI. This change to an
ESOP has been in process for many months. In addition, we have been laying the
Mitch Peterson
President of Operations
groundwork from an operations standpoint to be best prepared to maximize the value of our
TPIHospitality
TPI ESOP moving forward. As we worked through the process it caused me to envision what
our company would look like if everyone acted as an owner without regard for their specific
role within the company. If each of us approached our jobs with the same set of principles and ideals and viewed our work life
through the same lenses, we would have the foundation for creating results that weve never before seen! This dynamic would
accelerate the growth of your ESOP benefit within TPI as it creates the platform for both company and individual success.
Ironically, both company and individual success will become even more synonymous as we build our ESOP together.
We will create the platform for success by laying the groundwork. As I communicated in my last newsletter article, we are
deeply invested in weaving our newly memorialized Core Values, our existing Vision Statement and the value of Leadership
through every bit of TPIs fabric. Just imagine the results we will create when each of us lives and breathes these principles
in our daily activities. As we rise up to the challenge of this next chapter for TPI, just imagine the power of having 1,700
owners approaching their jobs the same way. This process is a marathon, not a sprint, but it is clear to me that the results will
be outstanding as we continue to change our perspectives!
The last remaining piece to the puzzle in preparing for our next chapter was to insure that we had the right Senior Leadership
structure and team in place. Recently, we modified the titles for members of our Operations and Administrative teams to more
closely align with todays recognized standards in the hospitality industry. This change also provides a more accurate
reflection of the Operations or Administrative responsibilities to which each person is held accountable. Our assessment
determined that we would need to add additional support in the area of Hotel Operations. This additional support is
necessitated by our current, aggressive hotel development plans, which will provide enormous momentum in allowing the
ESOP to gain traction quickly. As I am writing this article the selection process is well underway for the newly created Director
of Hotel Operations position. It is our hope and belief that this position can be filled by an internal candidate and we anticipate
making a decision mid to late December.
C-level team:
Tom Torgerson
Mitch Peterson
Kathy Aamot
Sheryl Walton
Administrative team
Paul Carlson
Gene Lubbers
Marlene Kubasch
Teresa Runke
Jennifer Serbus
Terri Grussing
Caitlin Lieser
A night to remember!
Monday, September 15th, 2014, will go down as one of the more memorable dates in the long and storied history of TPI. The
day started off like any of the previous thirteen TPIannual conferences with a general session led by Tom Torgerson. But thats
where the similarities ended. This year, Tom had a message to deliver that would leave the TPI team speechless.
Mitch Peterson led off the general session with a review of where TPI was a year ago, where it is today and where it is going
in the future. He summarized the tough love message that was delivered a year ago, and followed that up by reviewing the
many changes that had occurred at TPI over the past twelve months. Mitch mentioned the introduction of TPIs core values,
the focus on leading rather than managing and the expansion of the operations and administrative teams. Mitch reminded
everyone that We will push ourselves and each of you towards achieving excellence and we will ask more of ourselves and
each of you than we believe is possible. Mitch closed his remarks by stating that TPI is one large step closer to being a first
in class organization.
Following Mitchs comments, Tom Torgerson reviewed the multiple growth and enhancement projects happening throughout
TPI. He mentioned the nearly completed Willmar Legacy Project and the exciting anticipation of opening the Minnetonka
Hampton Inn and the Rochester Homewood Suites in the near future. In addition, Tom updated the team on current and future
enhancements happening in Maple Grove, Shoreview, Golden Valley and New Ulm.
What happened next caught the TPIteam by surprise, as Tom identified that beginning January 1st, 2015, he will be
transitioning the ownership of TPI to an Employee Stock Ownership Plan (ESOP). This move will make TPI what is believed
to be the largest 100% employee owned hospitality company in the nation. Tom said, I chose an ESOP to reward you for your
past, current and future diligent service to TPI, to preserve the legacy of our work here and position TPI for the next 50 years
and beyond. The announcement placed a brief hush over the room as those in attendance werent sure how to react. To help
everyone better understand the transition to an ESOP, representatives from Chartwell Capital Solutions were on hand to
clarify the transition and answer any questions.
After an extended question and answer session, there was only one thing left to do...celebrate! And what better way to
celebrate than with a marching band. The Willmar High School band kicked off the rest of the evening with a surprise entrance
and moved throughout the room playing a high energy version of Get Ready For This. The room was electric as the Ops
team threw out TPIcore values t-shirts, as well as tropical leis to enhance the Caribbean theme for the social hour. It
certainly was a night to remember, and marked the beginning of TPIHospitality being owned by its associates.
TPI Hospitality will be 100% employee owned...what does that mean for you?
For almost 85 years, the Torgerson brand has been built and preserved through hard work and the ability to create a
memorable guest experience. Whether it was Tom Torgersons grandfather establishing R. E. Torgerson Clothing in
Kerkhoven, Minnesota in 1930, or Toms father establishing the Holiday Inn of Willmar, Minnesota in 1972, or Tom Torgerson
expanding the company today, one common denominator has always existed...exceptional people creating exceptional results!
Beginning January 1st, each of us will be entrusted to carry on that legacy. As owners, we have a responsibility to ourselves
and to those working around us to execute our roles to the best of our abilities. It will be this relentless attention to ownership
that will not only create an amazing experience for our guests, but it will provide financial security for each of us and our
families. Success does not happen by accident, it takes a dedicated group of people led by the same values and practicing
the same vision. TPI Hospitality has the people, our associates, has the values, our core values, and has the vision, our vision
statement. We are poised for success, now its just up to each of us to make success a reality.
The TPIHospitality Employee Stock Ownership Plan (ESOP) allows Tom Torgerson to transition his ownership to the
associates of TPI though the ESOP. We maintain the same culture through our core values and vision statement. We
maintain the same policies, procedures and benefits. We maintain the same corporate structure, with Tom Torgerson as our
Chief Executive Officer. The only thing that changes is that over time, the value of TPI transitions from Tom to the associates
of TPI. At the end of each year, the increase in the value of the company is shared by all associates. Each spring, beginning
in 2016, every associate will receive a statement that reflects the amount of ownership the associate has earned. Over time,
the value of an associates ESOP account can grow substantially, providing a valuable source of retirement funding. To
participate in an ESOP, the Federal government sets forth two specific criteria that must be met. The associate must be at
least 21 years of age, and the associate must work at least 1,000 hours per calendar year (about 19 hours per week). If an
associate meets these two criteria, they begin vesting at a 20% annual rate, meaning that over five years an associate
becomes fully vested. Being fully vested means that the funds in your ESOP account are 100% yours. If you are fully vested
and should leave TPI or retire, 100% of the funds in your account are distributed back to you over a five-year period (20% per
year). These funds can then be rolled into another qualified retirement account with no tax penalties. Spending the funds may
involve paying taxes, depending on your age and current income.
ESOPs are not uncommon. Today, there are almost 11,000 ESOPs operating in the United States. A few of the more
well-known ESOPs in our part of the country include Anderson Window Company, Hy-Vee, Scheels and Kwik Trip. What is
more surprising is that far less that 50% of all ESOPs are 100% employee owned. In many cases, the employee ownership
may be 50% or less. That is not the case with TPI. As of January 1st, 2015, TPI will become 100% owned by TPI associates.
Out of the 11,000 ESOPs nation-wide, TPI will rank as the 90th largest ESOP, and even more exciting is that also on January
1st, 2015, TPI will become the largest 100% employee owned hospitality company in the nation! Wow! Now thats something
to be proud of, and something we can all work hard to build on.
In the very near future, all TPI associates will be able to learn more about the ESOP at www.TPIowners.com. This website will
be loaded with information and resources that will allow us all to learn more about what it means to each of us to be an owner.
Watch for this new tool to be available shortly after the New Year.
So what does 100% employee owned mean for you? It means that you will be part of a group of owners who have an
opportunity each day you work to improve the value of the company you own. Every time you check a guest in at the front
desk, or cook a guests meal, or clean a guests room, or fix a guests air conditioner, or deliver a guests meal, or wash a
guests dishes, or simply pass a guest in the hallway...you have an opportunity to help TPI grow. Its not a few big things that
make a difference, its the hundreds of little things we each do every day that determine our success. We must each begin to
think like owners, act like owners and hold each other accountable as owners. Together, we can continue the success that
Tom Torgersons grandfather started in 1930.
Like TPIHospitality
on Facebook
facebook.com/tpihospitality
Taking advantage of Target Retirement Date Funds can help you get on track for retirement
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of nearly 84%!* When you are paying less for your funds, more money stays in your account working for you.
You can find more information on these investment opportunities by logging on to your TPIHospitality 401k Retirement
Savings Plan at www.alerusretirementsolutions.com or by calling 800-433-1685. You can also contact Sweet Financial
Services at 800-658-2507 for any of your investment related needs.
*Vanguard Target Retirement Funds average expense ratio: 0.17%. Industry average expense ratio for comparable target-date funds: 1.05%. Sources: Vanguard and Lipper, a Thomson Reuters Company, as of December 31, 2013.
Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the
workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in a Target Retirement Fund is not guaranteed at any time, including on
or after the target date. These fund suggestions are based on an estimated retirement age of approximately 65. Should you choose to retire significantly earlier or later, you may want to consider a fund with an asset allocation
more appropriate to your particular situation. All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Investments in bonds are subject
to interest rate, credit, and inflation risk.
A lot has happened over the past twelve months, here are the highlights of 2014
10
Steve Mallan from Holiday Inn New Ulm won 7th, 6th and 1st place medals
at the USA Special Olympics bowling tournament
TPI Hospitality opens its first Best Western Plus branded hotel
Hampton Inn Fairmont earns the highest guest satisfaction score among
all Hampton Inns worldwide for two consecutive months
4 TPI Hospitality hotels are ranked in the top 10 of 222 hotels throughout
the entire Minneapolis and St. Paul area
$4,250 was raised for local charities at the TPI Hospitality annual basket
competition during the 2014 team conference
10
Its
NEW
Its
NOW
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Growing with
Tim Mattern (2002 to present)
General Manager
Green Mill and Ruffs Wings & Sports Bar in Willmar
12
TPI Hospitality
Jason Hall (1997 to present)
General Manager
Staybridge Suites Bloomington
What attracted you to TPI? Growing up in Austin, the
Holiday Inn, and specifically TPI, had a very positive
reputation. Once I decided to focus on Hospitality
Management while in college, TPI was a natural fit for me
to apply to for my college internship.
What has your career path been to this point at TPI?
Internship at the Austin campus in 1997
Guest Service Representative at Hilton Garden Inn Eagan
F&B Manager at Hilton Garden Inn Eagan
Assistant General Manager at Hilton Garden Inn Eagan
General Manager at Staybridge Suites Eagan
General Manager at Staybridge Suites Bloomington
and Jason are just two examples of the many current TPI
lieves strongly in promoting from within, and your hard work
nt can lead to a rewarding career. If you are interested in
ere may be an ideal opportunity waiting for you right at your
here
sting website at www.tpihospitalityjobs.com. You may find a
ther as owners!
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For over twenty-two years, Innside TPI has shared the memories and told the stories of current and past TPI associates. From
describing the historical Halloween snow storm of 1991, through the development of over thirty new properties, to the
announcement of employee ownership, one thing has remained constant...amazing people!
Below are trivia questions created from past issues of Innside TPI. The first person to submit the correct answer to each
question to pete@tpimn.com will be awarded a certificate for a two-night stay at any TPI hotel location. Do you know your TPI
history? Hint: You can find all of the past issues of Innside TPI at www.tpihospitality.com/about/innside-tpi. Good luck!
1.
_____N
I__
____N
2.
3.
4.
A current TPI General Manager who did an internship at Staybridge Suites Eagan in 2002: ____T _____H
5.
6.
This current TPIassociate was named GM at Holiday Inn Express Eagan on September 11, 1997: _O__ _____R
7.
A current TPIassociate who was chosen as the 1994 Perkins Austin Employee of the Year: _A___ ___N
8.
This person was the first GM at Holiday Inn Express Golden Valley: _____S
_A______
9.
A one-time delivery driver for Green Mill, with Fargo as his home town: _ _ _ E
_A_______
_ _ ______T
_ E _ _ _
__N
__Y
11. The Holiday Inn Austin restaurant name prior to Torges Grille & Bar: __L___E
12. Director of Sales at Holiday Inn Fairmont in 1995: J _ _ _ _
____E__
13. 2003 Associate of the Year at Hilton Garden Inn Shoreview: __R_
____L
Haley Harms receives a valuable experience in Fairmont as she pursues her degree at SMSU
Haley Harms, a student majoring in Hospitality Management at Southwest
Minnesota State University in Marshall, MN, completed a working internship this past
summer at the Holiday Inn Fairmont. She did an outstanding job helping guests and
learning all of the different departments within the hotel. Haley worked in
housekeeping, as a prep-cook in the Green Mill kitchen, all of the shifts at the front
desk (even the overnight), and attended multiple management meetings and
participated in strategic market development. Haley also attended meetings for the
Fairmont Convention and Visitors Bureau, the Minnesota Lodging Association and
was a guest at a TPI GM Council meeting. Haley was a great addition to the TPI
team over the past summer, and we expect big things from her in our industry in the
future. She is just one of many interns who have been part of the TPI Hospitality
family, if only for a summer. TPI is committed to helping develop future leaders in
our industry, and Haley has certainly Set the example for others to follow!
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...continued from page 3, Laying the ground work for becoming an ESOP
Operations Team:
Joel Vogler
Dennis Wallenta
Pete Bromelkamp
Dee Anne Osborne
Bob Smith
Mike Lamoureux
Larry Eisenberg
John Cox
Jessica Kloss
To Be Determined
Becca Gross
Chad Pemberton
I would like to personally thank each of you for your contributions on a daily basis. Without question, your efforts are the
backbone of TPIs success.
I hope that you all have a great holiday season and can find an opportunity to inventory the blessings in your life. I also look
forward to seeing each of you after the first of the year as you enjoy your new titles within TPIthat of Employee Owner!
~ Mitch Peterson
TPIHospitality...Workinglikeowners,thinkinglikeguests!
TPIHospitality
WatersEdgeProfessionalBuilding
10315thAvenueNWSuite200
P.O.Box1020
Willmar,MN56201
Phone:320-235-7207