Patagonia: 'Earth Is Now Our Only Shareholder'

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?