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Patagonia Founder Transfers Ownership To Boost Climate Advocacy

The ownership of Patagonia has transferred control of the outdoor clothing retailer company to the Patagonia Purpose Trust and the Holdfast Collective. The Holdfast Collective is a 501(c)(4) nonprofit organization that will advocate for causes and political candidates and make grants and investments that fight environmental crises, protect nature and biodiversity and support thriving communities. 

Patagonia is a privately held company, so hard financial attributes are scarce and at times in conflict. Several published sources list its valuation as $3 billion, with The New York Times stating its annual profits are around $100 million from $1 billion in sales.

The Patagonia Purpose Trust controls company decisions such as board of directors membership and changes to the company’s legal charter.

As structured, the Holdfast Collective owns 98% of Patagonia and all of Patagonia’s nonvoting stock, which has economic value but no decision-making role. The Patagonia Purpose Trust owns 2% of the company and all of the voting stock, which has both economic value and decision-making authority.

Ventura, Calif.-based Patagonia will continue to be a for-profit company, as well as a certified B Corp – a business that has been certified as meeting high standards of social and environmental performance, public transparency and legal accountability as it seeks to balance profit and purpose. 

Additionally, in 2012 Patagonia became the first California company to register as a benefit corporation, a relatively new corporate structure that allows the company to put the interests of society and the environment alongside financial interests of shareholders. Traditional corporate structures are required to prioritize the financial interests of shareholders above other considerations. Patagonia will retain this designation as well.

The Holdfast Collective will be funded by Patagonia’s excess profits, which according to a statement on Patagonia’s website “will be distributed as a dividend to the Collective to be used for its work.” Excess profits are money the company generates after meeting its financial obligations. Financial obligations may include money set aside to ameliorate the effects of business interruptions such as pandemics or supply chain disruptions.

Patagonia will continue, as it has done for years, to donate 1% of its annual sales to various grassroots environmental organizations. The new structure safeguards this commitment: under it, these donations cannot be changed without the approval of the decision-making authority vested in the Patagonia Purpose Trust.

Members of the Chouinard family, led by Patagonia founder Yvon Chouinard, 83, will guide the Patagonia Purpose Trust by electing and overseeing the Trust’s leadership. Chouinard family members will continue to hold seats on Patagonia’s board. The Chouinard family will also influence the activities of the Holdfast Collective. Management and employees at Patagonia itself are expected to remain in place.

The Chouinard family will pay around $17.5 million in taxes due to giving their ownership shares to the Trust, according to The New York Times.

The new two-tiered stock structure is unusual for a non-media company, and it was arrived at after other possibilities were considered and rejected. As Yvon Chouinard wrote in a blog post, “One option was to sell Patagonia and donate all the money. But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed.”

The post continued: “Another path was to take the company public. What a disaster that would have been. Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility. … Truth be told, there were no good options available. So, we created our own.”

Patagonia is a privately held company, so hard financial attributes are scarce and at times in conflict. Several published sources list its valuation as $3 billion, with The New York Times stating its annual profits are around $100 million from $1 billion in sales.

The Chouinard family will pay around $17.5 million in taxes due to giving their ownership shares to the Trust, according to The New York Times.

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