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  • March 2023 (Revised March 2023)
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Patagonia: 'Earth Is Now Our Only Shareholder'

By: Brian Trelstad, Nien-hê Hsieh, Michael Norris and Susan Pinckney
  • Format:Print
  • | Language:English
  • | Pages:20
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Abstract

In September 2022, Yvon Chouinard, the iconoclastic founder of outdoor apparel company Patagonia, announced a new ownership model for his company. Chouinard and his family had held complete control of the company's voting and non-voting stock since its founding 50 years earlier. Beginning in the late 2010s, Chouinard had charged a group of board members and company executives with the responsibility to come up with a new ownership model that fulfilled several objectives. First, it freed up as much of Patagonia's financial value as possible to solve the climate crisis. Second, it prevented outside owners from exerting an influence that could push Patagonia away from its environmentally-focused mission or hurt Patagonia's employees. That meant avoiding a large tax bill that would have forced the family to sell stock. Third, the new ownership model had to offer an option that like-minded businesspeople could leverage to potentially shift the narrative around capitalism and consumption. The result, which came into effect in September 2022, involved a perpetual purpose trust taking ownership of 100% of Patagonia's voting stock, and therefore decision-making control; and a 501(c)4 nonprofit taking ownership of 100% of non-voting stock, and therefore owning the vast majority of the financial value of the company. Patagonia would issue annual dividends to these two stockholders, which would then be distributed to environmental organizations. CEO Ryan Gellert was now faced with running a company whose mission was to save planet Earth. How well was the new ownership structure suited to its purpose? And how would things change for Gellert going forward?

Keywords

Trusts; Business Ventures; Business Organization; Family Business; Restructuring; Change; Disruption; Transition; Decision Making; Ethics; Values and Beliefs; Finance; Financial Management; Governance; Corporate Governance; Investment Activism; Leadership; Labor; Law; Common Law; Management; Goals and Objectives; Organizations; Corporate Social Responsibility and Impact; Mission and Purpose; Organizational Change and Adaptation; Organizational Culture; Ownership; Ownership Type; Family Ownership; Private Ownership; Social Enterprise; Nonprofit Organizations; Society; Social Issues; Wealth and Poverty; Value; Value Creation; Apparel and Accessories Industry; United States

Citation

Trelstad, Brian, Nien-hê Hsieh, Michael Norris, and Susan Pinckney. "Patagonia: 'Earth Is Now Our Only Shareholder'." Harvard Business School Case 323-057, March 2023. (Revised March 2023.)
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About The Authors

Brian L. Trelstad

General Management
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Nien-he Hsieh

General Management
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Related Work

    • September 2023
    • Faculty Research

    Patagonia: 'Earth Is Now Our Only Shareholder'

    By: Brian Trelstad, Nien-hê Hsieh, Michael Norris and Susan Pinckney
    • March 2023 (Revised March 2023)
    • Faculty Research

    Patagonia: 'Earth Is Now Our Only Shareholder'

    By: Brian Trelstad, Nien-hê Hsieh, Michael Norris and Susan Pinckney
Related Work
  • Patagonia: 'Earth Is Now Our Only Shareholder' By: Brian Trelstad, Nien-hê Hsieh, Michael Norris and Susan Pinckney
  • Patagonia: 'Earth Is Now Our Only Shareholder' By: Brian Trelstad, Nien-hê Hsieh, Michael Norris and Susan Pinckney
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