In addition, profits that aren’t reinvested back into the business will be distributed by Patagonia as a dividend to the Holdfast Collective to help address climate change, according to a news release. The company projects that it will pay out an annual dividend of about $100 million — an amount that could change depending on the health of the business.
“It’s been a half-century since we began our experiment in responsible business,” Chouinard, 83, said in the release. “If we have any hope of a thriving planet 50 years from now, it demands all of us doing all we can with the resources we have. As the business leader I never wanted to be, I am doing my part. Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source.”
In Wednesday’s letter, Chouinard explained that selling Patagonia or going public were both flawed options. While the company could have been sold and all the profits donated, there wasn’t a guarantee that a new owner would maintain the business’s values or ensure that all of its workers stayed employed. And taking the company public, Chouinard wrote, would have been a “disaster.”
Ryan Gellert, Patagonia’s CEO, said in a statement that the Chouinard family “challenged” him and a few others two years ago to develop a new structure for the company with two central goals: “They wanted us to both protect the purpose of the business and immediately and perpetually release more funding to fight the environmental crisis,” he said. “We believe this new structure delivers on both and we hope it will inspire a new way of doing business that puts people and planet first.”
Under the new arrangement, the Chouinard family will guide the Patagonia Purpose Trust and the philanthropic work carried out by the Holdfast Collective, according to the news release. The company’s leadership also will not change. Gellert will continue to serve as the company’s CEO while the Chouinard family remains on Patagonia’s board.
“Companies that create the next model of capitalism through deep commitment to purpose will attract more investment, better employees, and deeper customer loyalty,” Charles Conn, chair of the board, said in a statement. “They are the future of business if we want to build a better world, and that future starts with what Yvon is doing now.”
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