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One of Southern Arizona's largest construction firms is remodeling itself into an employee-owned company.

KE&G Development LLC, with about 250 employees, will be 100 percent owned by its employees when the plan is fully executed, said Karol George, founder and president.

Under the employee stock ownership plan now in place, the company's stock will be transferred to KE&G employees over a five- to 10-year period beginning next year, he added.

The plan should help increase incentives for employees and provide long-term retirement benefits, he said.

George holds the majority of the company's shares, with two other employees holding minority shares, he said. He will remain active as president and chairman of the firm during the transition, he added.

After that, George, 63, said he plans to "play a little tennis, ride horses and raise calves" and stay active in land development.

KE&G Homes started in 1972 in Sierra Vista, and the development company was formed two years later.

Five years ago, George sold the Tucson home division to Richmond American Homes and the Sierra Vista branch to his daughter and son-in-law, he said.

KE&G Development prepares subdivision sites for other builders and works on major road and commercial construction projects. George said annual revenues at the company run between $35 million and $50 million.

The stock value for the employee stock ownership plan will probably be at least $12 million, he said, but details are not final.

Such plans operate through a trust under which money is borrowed to buy out current stockholders over time. Future company profits pay the money back. Employees who retire or leave the company sell their accumulated shares back to the trust, thus preserving ownership for company employees.

Although KE&G is headquartered in Sierra Vista, most of its work and its employees are in the Tucson area, George said.

One of those employees in Tucson said the stock plan unveiled in recent days is "an amazing opportunity."

Project manager Chris Albright, 29, said KE&G has a large group of people at the senior level who may be retiring in about 10 years, "leaving people in my age range ready to take over. I'm really looking forward to that."

Albright said he had planned to stay with the company a long time, but the employee stock ownership plan "definitely makes it a lot more interesting."

George said the company will continue to offer a 401(k), but with the employee stock ownership plan, an employee able to participate in the stock plan for 20 years or more should have a "comfortable retirement."

Albright agreed that the company will benefit from the employee stock plan because it will "entice good people to come here and retain the good people we had."

To develop its plan, KE&G consulted with Menke & Associates Inc. in San Francisco, one of the largest firms in the country dealing with employee stock ownership plans.

Company founder John Menke said the plans are not good for every company. For example, a company losing money or a firm with fewer than about a dozen employees are probably not right for such a stock plan.

KE&G is larger than the typical firm to adopt such a plan, Menke said. Most firms with these plans have 50 to 100 employees, he added. There are about 10,000 U.S. companies with active plans, he said.

Sundt Cos. Inc., the large construction firm headquartered in Tucson, with about 1,400 employees, became 100 percent employee-owned in 2000 under an employee stock ownership plan.

Company owners find another reason why the plans are attractive, Menke pointed out. Capital gains taxes are deferred indefinitely for owners who transfer shares to a plan if they sell at least 30 percent of the company and they invest the money in stocks or bonds.