He is no longer a billionaire | The Press

The founder of Patagonia announced Wednesday that he is parting ways with his company. Back to Yvon Chouinard’s amazing journey.

Posted at 7:00 am.

David Gelles
The New York Times

Half a century after founding the outdoor clothing manufacturer Patagonia, Yvon Chouinard, the eccentric mountaineer who became a billionaire in spite of himself, thanks to his unconventional approach to capitalism, is selling his company.

Instead of selling the company or taking it public, Yvon Chouinard, his wife and two grown children transferred their ownership of Patagonia, worth about $3 billion, to a special trust and non-profit organization . They were created to preserve the company’s independence and ensure that all its profits – about $ 100 million a year – are used to fight climate change and protect unused land around the world.

The unusual move comes at a time when billionaires and corporations are under increased scrutiny, with their talk of making the world a better place often overshadowed by their contribution to the problems they admittedly they want to solve.

The departure of Mr. Chouinard’s family fortune is consistent with his long-standing rejection of corporate standards and lifelong passion for environmental protection.

“Hopefully this will influence a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people,” said Chouinard, 83, from Lewiston, Maine, in an interview.

We will donate as much as possible to people who are actively working to save this planet.

Yvon Chouinard

Patagonia will continue to operate as a privately held, for-profit company headquartered in Ventura, Calif., selling more than $1 billion worth of ski jackets, beanies and pants annually.


PHOTO LAURE JOLIET, THE NEW YORK TIMES ARCHIVES

A Patagonia store at the company’s headquarters in Ventura, California in 2018

But the Chouinards, who controlled Patagonia until last month, no longer own the company.

The value of principles

Last August, the family irrevocably transferred all of the company’s voting shares, or 2% of all shares, to a new entity called the Patagonia Purpose Trust.

This trust, which will be managed by family members and their closest advisors, is intended to ensure that Patagonia fulfills its commitment to run a socially responsible business and distribute its profits. . Because the Chouinards donated their shares to a trust, the family will pay approximately US$17.5 million in taxes on this donation.

The Chouinards then donated the remaining 98% of Patagonia, or its common stock, to a newly created non-profit organization called the Holdfast Collective, which will now receive all of the company’s profits and use the funds to fight climate change. Because Holdfast Collective is a 501(c)(4) organization, which allows it to make unlimited political contributions, the family received no tax benefits for their donation.

“It costs them, but it’s a cost they’re willing to pay to make sure this company stays true to its principles,” said Dan Mosley, partner at BDT & Co, a merchant bank. Buffett, and who helped Patagonia design the company’s new financial structure.

And they don’t get a charitable deduction for it. There is not even the slightest tax advantage here.

Dan Mosley, Partner at BDT & Co

Barre Seid, a Republican donor, is the only other example in recent memory of a wealthy business owner donating his business to philanthropic and political causes. But Barre Seid took a different approach by donating 100% of his electronics business to a nonprofit, reaping huge personal tax returns while donating $1.6 billion to fund conservatives. cause, including efforts to prevent climate change action.

An amazing story

By donating most of their possessions during their lives, the Chouinards – Yvon, his wife Malinda and their two children, Fletcher and Claire, both in their 40s – have established themselves as one of the most generous families in the country.

Patagonia has already donated $50 million to the Holdfast Collective and plans to donate another $100 million this year, making the new organization a major force in the field of climate philanthropy.

Mr Mosley said the story was unlike anything he had seen in his career. “In my more than 30 years of estate planning, what the Chouinard family has accomplished is truly remarkable,” he said.

This is an irrevocable commitment. They don’t get it anymore and they don’t want to translate it again.

Dan Mosley, Partner at BDT & Co

For Mr. Chouinard, it is even simpler; it offers a satisfactory resolution to the issue of succession planning.

“I don’t know what to do in business because I don’t really want a business,” he said from his home in Jackson, Wyoming. I don’t want to be a businessman. Now I could die tomorrow, the company would continue to do the right thing for the next 50 years, and I wouldn’t need to be here. »

“Maybe it will work”

In a way, the seizure of Patagonia is not so surprising that it comes from Mr. Chouinard.

As a rock climbing pioneer in California’s Yosemite Valley in the 1960s, Mr. Chouinard lives out of his car and feeds on battered 5-cent cans of cat food.

To this day, he still wears tattered old clothes, drives a beat-up Subaru, and splits his time between modest homes in Ventura and Jackson. Mr. Chouinard has no computer or cell phone.

Patagonia, founded by Mr. Chouinard in 1973, grew into a company that reflected his own idealistic priorities, as well as his wife’s. The company was an early adopter of all kinds of products or practices, from organic cotton to on-site baby care, and became famous for discouraging consumers from buying its products. One will remember in particular a Patagonia advertisement on New York Times on Black Friday saying, “Don’t buy that jacket. »

For decades, the company has donated 1% of its sales primarily to environmental activists working in the fields. And in recent years, the company has become more politically active, continuing to sue the Trump administration in an effort to protect Bears Ears National Monument.


PHOTO LAURE JOLIET, THE NEW YORK TIMES ARCHIVES

Bears Ears National Monument stickers at Patagonia headquarters in Ventura, California in 2018

But while Patagonia’s sales soared, Mr. Chouinard continued to rise, creating an uncomfortable situation for an unfit hater of excess wealth.

In the magazine Forbes, I was listed as a billionaire, which really pissed me off. I don’t have a billion dollars in the bank. I don’t drive a Lexus.

Yvon Chouinard

classifications Forbesthen the COVID-19 pandemic, helped set in motion a process that took place over the past two years and that ultimately led the Chouinards to sell their business.

In mid-2020, Mr. Chouinard began telling his closest advisers, including Ryan Gellert, the company’s CEO, that if they couldn’t find a good solution, he was ready to sell the company.

“One day he said to me, ‘Ryan, I swear if you don’t start acting, I’m going to get the list of billionaires in the magazine. luck and start calling people without asking,” Gellert said. At that moment, we understood that he was serious. »

The ideal solution

Now that the future of Patagonia ownership is clear, the company must realize its grand ambitions to run a profitable company while fighting climate change.

Some experts warn that without the Chouinard family’s financial stake in Patagonia, the company and its affiliated entities could lose sight of their purpose. Although the children remain employees of Patagonia and the Chouinards have enough to live comfortably, the company no longer distributes income to the family.

“What makes capitalism successful is that there is an incentive to succeed,” said Ted Clark, chief executive of the Northeastern University Center for Family Business.

If you remove all the financial incentives, the family really has no interest in it, except for a nostalgia for the good old days.

Ted Clark, CEO of the Northeastern University Center for Family Business

As for how the Holdfast Collective distributes Patagonia’s profits, Chouinard said much of the focus is on nature-based climate solutions, such as preserving wild lands. As a 501(c)(4) organization, Holdfast Collective is also able to draw on Patagonia’s experience in funding grassroots activists, but it is also able to lobby and donate to political campaigns.

For the Chouinards, it solves the question of what happens to Patagonia after the death of its founder, ensuring that the company’s profits are used to protect the planet.

“I feel great relief that my life is in order,” said Mr. Chouinard. For us, this is the ideal solution. »

This article was originally published on New York Times.

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