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Patagonia’s founding family gave away company profits—but it still controls the retailer’s future

September 21, 2022, 9:15 AM UTC
Patagonia founder Yvon Chouinard says that Earth is the company's only shareholder now.
Ben Gabbe—Getty Images for Tribeca X

No doubt you saw the news that Yvon Chouinard, the founder of outdoor wear giant Patagonia, “gave away” the company to a climate change charity, the Holdfast Collective, last week. In an open letter, Chouinard said that Earth is now the company’s “only shareholder.” But that’s an overly-altruistic summary. The Chouinard family has retained strong control of the company. What they’re “giving away” are profits.

Under Patagonia’s new business structure, company shares have been split between two new entities: the Patagonia Purpose Trust, and the Holdfast Collective charity. The Collective gets 98% of total shares while the Trust gets just 2%. However, the Trust’s 2% of shares also carry all of Patagonia’s voting rights, which means the trust has 100% of company oversight.  

“The Chouinard family will guide the Patagonia Purpose Trust, electing and overseeing its leadership. Family members will continue to sit on Patagonia’s board,” Patagonia says in an FAQ on the change of structure. Daily management will still be led by the company’s board of directors and CEO, Ryan Gellert.

When I asked the company in an email who will determine who sits on the board in the future, Patagonia reiterated that the “Chouinard family will guide the Patagonia purpose trust.” The family will also “guide” work at the Collective.

Ensuring the Chouinard family retain control or “guidance” of Patagonia isn’t a bad thing. The family has done well establishing the clothing giant as a philanthropic force so far. But there are still few details on how much funding the Collective will actually receive from Patagonia nor how the Collective will invest its allocation.

Profits at Patagonia are roughly $100 million a year, which could all be issued as dividends. But the company told me funding for the Collective will be made through dividends payments issued at the board’s discretion and that the board will determine the value of the payout based on “many factors, including the company’s future needs.” The Trust will also receive dividends payments, in line with its 2% shareholding.

The upshot, however, is that when Patagonia does issue dividends, 98% of the payout will automatically go to the new charity. Patagonia says this new arrangement is better than remaining private and donating funds to an established charity because it will ensure the group is “permanently committed to being in business to save our home planet.” 

And even if the Chouinard family does retain its influence on the company’s management, sacrificing personal access to a $100 million windfall is really the remarkable element of the move. It’s a novel approach to stakeholder capitalism and, if it works, one that might provide a blueprint for other companies. 

Eamon Barrett


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