Yvonne Chouinard no longer owns Patagonia

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On the eve of its fiftieth anniversary, Patagonia, one of the nation’s most creative And the moral Companies, under new ownership.

Founded by Yvonne Chouinard in 1973 and run by the Chouinard family since its inception, the outerwear maker announced today that the company has restructured, with control of the business transferred to two new private entities: a fund that owns all voting shares in Patagonia. and a non-profit organization called Holdfast Collective that owns all non-voting shares and oversees environmental work in Patagonia, which is set to expand sharply.

Effective immediately, 100 percent of Patagonia’s profits that have not been reinvested in the business will be distributed to Holdfast Collective, which it will use to help fight the environmental crisis. The company has for years donated 1 percent of its sales to environmental causes, but the shift is set to increase that number dramatically. The new company’s estimated philanthropic expenditures will be approximately $100 million per year.

Yvon Chouinard has owned Patagonia since he founded the company in 1973. (Photo: Campbell Brewer)

Ryan Gellert, the company’s current CEO, will remain in his position as CEO, and the Chouinard family will maintain extensive involvement, sitting on the company’s board of directors, directing the trust holding voting shares, and overseeing the philanthropic efforts of Holdfast Collective. The company’s headquarters will remain in Ventura, California.

Create a new organizational model

Chouinard, 83, began planning to restructure the company two years ago. Find a way to increase the company Positive impact on the environmentGrowing uneasy about his status as a billionaire, he considered several options. Everyone has followed the path they have famously taken for years: breaking with traditional corporate trends and redefining what entrepreneurs can do when they use their businesses as social tools.

“One option was to sell Patagonia and donate all the money,” he wrote in a message published today. “But we cannot be sure that the new owner will maintain our values ​​or keep our team of people around the world employed. Another path has been to make the company public. What a disaster it would have been. Even well-meaning public companies are under great pressure to make short profits. Term comes at the expense of long-term vitality and responsibility. Truth be told, there were no good options available. So, we set up our own.”

Black and white photo of a young man with rock climbing equipment
Yvonne Chouinard in 1972, a year before he founded Patagonia (Photo: Tom Frost)

Gellert and a small team of Patagonian CEOs have been tasked with creating the new business model. Under the guise of the project’s codename — Chacabuco, a reference to a fishing site in Chile — they began brainstorming by mid-2020. Other than selling the company or taking it to the public, they considered turning it into a nonprofit or employee-owned cooperative, such as REI. In the end, they came to the current plan.

“Two years ago, the Chouinard family challenged a few of us to develop a new chassis with two central goals,” Gelert wrote in a statement released today. They wanted us to protect the purpose of the business and to immediately and permanently release more funding to combat the environmental crisis. We think this new structure accomplishes both things.”

This new structure required the Chouinard family — Yvonne, his wife Malinda, and their children Claire and Fletcher — to donate all of their company’s shares to the newly created trust, officially called the Patagonia Purpose Trust, which would cost them about $17.5 million in gift taxes.

As for the Holdfast Collective, it is structured as a 501(c)(4), which the company said it chose for the flexibility of the legal entity. 501(c)(4)s are allowed to make unlimited donations to political causes, which means Chouinards don’t get any tax benefits for the money that flows into the entity.

Patagonia’s head of communications and public policy, Corley Kenna, said he expects Holdfast Collective to distribute its money in broad and diverse ways: in grants to organizations that address the root causes of the climate crisis, investments in land and water protection, and support for stronger environmental policy. To get a hint as to what kind of aggressive advocacy Patagonia is likely to pursue, Kenna urged people to remember that this is the brand that has called on her community to “Vote on assholesDuring the Trump administration, they joined grassroots groups in Utah Sue the same administration for him shrink Bears National Monument.

Yellow office building by the ocean
Ventura Campus in Patagonia, where the company has been headquartered since its founding (Photo: Kyle Sparks)

In the end, corporate restructuring — especially the transfer of all non-voting stock to a nonprofit — was only possible because Patagonia does not offer stock options to employees. in his book Responsible companypublished a decade ago, Chouinard made clear his concerns about public ownership and employees, arguing that broader control of the company’s stock may have prevented a change like the one announced today.

“[We] Concerned that, as the shares are distributed more widely, the company will become too cautious about taking risks in pursuit of its environmental goals,” Chouinard wrote in 2012. So that Patagonia can continue to push the boundaries of what business considers possible, [we] Willing to take risks that could lead to broader ownership downtime, even for employees committed to reducing environmental impact.”

Announcing changes

The company shared the news with employees in a virtual town hall this morning. In its announcement, Patagonia noted that Chouinard was in good health, but “wanted to have a plan for the future of the company and the future of the planet,” according to Kristen McDevitt Tompkins, a board member.

“The current capitalist system has made its gains at tremendous cost,” Charles Kuhn, Patagonian Chairman, wrote in a statement released today. “The world is literally on fire. Companies that create the next model of capitalism through a deep commitment to purpose will attract more investment, better employees, and deeper customer loyalty. They are the future of business if we want to build a better world, and that future begins with what Avon is doing now.”

True to his talent Attractive Marketing her environment effortsPatagonia has created a pair of logos that encapsulate the modified company’s structure. Instead of going public with the brand, the purpose is gone. And since the Patagonia Purpose Trust is the company’s controlling shareholder and must adhere to the company’s environmental mission, the brand now claims that Earth is its “sole shareholder.”

The claim may be less exaggerated than it appears. The Patagonia Purpose Trust has no individual beneficiaries and the shares it controls can never be sold, which means, according to Deputy General Counsel Greg Curtis, “there is no financial incentive, or structural opportunity, for any deviation in the purpose of this trust.” An unnamed independent protector has also been appointed to “monitor and enforce” the trust’s mission.

“It has been half a century since we began our Responsible Business Experience,” Chouinard wrote today, addressing the company’s nearly 3,500 employees. “If we have any hope of a thriving planet 50 years from now, it will require all of us to do everything we can with the resources we have. As a business leader I never wanted to be, I am doing my part. Rather than extract value from nature and transform it into Wealth, we use the wealth Patagonia creates to protect the source. We make Earth our only contributor. I’m very serious about saving this planet.”