After 120 years, Paddock family sells stake in Daily Herald to employees
Nearly 120 years after the date Hosea Cornish Paddock bought the newspaper that would become the Daily Herald, his descendants have sold it to employees.
The Paddock Publications board of directors on Tuesday voted to convert the company to 100 percent employee ownership, in which Paddock family members will sell their interest in the Arlington Heights-based publisher.
Final documents are being signed, with the closing scheduled Friday.
"While this represents the end of an era of family ownership, those of us who have been here through most of the newspaper's modern times understand the value of a great family business and its personal engagement with customers and readers," said Douglas K. Ray, chairman, publisher and CEO of the company. "The board of directors and management are committed to maintaining that commitment to community service and journalistic excellence, and our board feels strongly that those guiding principles be maintained and fostered under the new employee ownership structure."
The management team and board will remain in place and continue overseeing the company's operations, Ray said.
The Paddocks made the company partially employee-owned in 1972, but the latest transaction fully converts ownership of the company to employees through an Employee Stock Ownership Plan.
Company officials announced in September their intentions to pursue full ESOP ownership.
"It's a point of taking off into a new era for us," fourth-generation executive Robert Y. Paddock Jr. told employees during the company's annual awards ceremony Thursday. "In some ways it won't be a change. It'll still be the Daily Herald and Paddock Publications. But ... the ESOP and the staff will be the fifth generation."
Added his cousin Stuart R. Paddock III, also an executive with the company, "There is no better way to preserve the spirit of our family business, its dedication to the communities we serve, our absolute commitment to excellence in journalism -- qualities which have evolved over the last 120 years -- than selling the company to the very employees most responsible for our success."
Under the ESOP -- a long-term retirement plan -- all shares of company stock are privately held and employees are eligible to have ownership based on discretionary contributions by the company each year and to share in the company's success through increases in the value of that stock.
"As I said in announcing the ESOP to staff today, all this was made possible because of extra effort, dedication and just plain hard work on the part of the staff which has put the company in a financial position to make possible employee ownership," Ray said. "I also said the Daily Herald Media Group is the envy of the industry, and we are. In a challenging media environment, we are stronger than ever, and as employee owners our goal will be to build upon that to the benefit of the employees themselves and the communities we serve."
Hosea C. Paddock operated the company with the motto "To fear God, tell the truth and make money" after he bought the Palatine Enterprise weekly for $175 on Dec. 15, 1898, and then quickly added weeklies in Arlington Heights and later Mount Prospect, Roselle, Wheeling and Bensenville.
By 1969, under third-generation President and Publisher Stuart R. Paddock Jr., the company began daily publication of many of its Northwest suburban editions.
Today, the Daily Herald remains the third-largest newspaper in Illinois.
Former Arlington Heights Village President Arlene Mulder, who spent 20 years at the helm of village government, said Thursday the newspaper has been a constant in her life since she moved to the suburbs in the 1960s.
Having gotten to know the Paddocks over the years, Mulder credited them with operating a local newspaper committed to suburban coverage and expressed optimism in the company's new direction.
"They're just real people. They were not big corporate people. They were a family," Mulder said. "I'm not surprised the company will be controlled now by employees. I think their employees are part of the family. They were always treated like family."
In addition to the daily newspaper, Paddock Publications operates the monthly Daily Herald Business Ledger, the weekly Reflejos Spanish-language publication, and a group of newspapers in central and southern Illinois. It's also grown its businesses in commercial printing, niche publications and event marketing.