He’s not a billionaire anymore The press

The Patagonia founder announced on Wednesday that he was parting with his company. A look back at Yvon Chouinard’s extraordinary journey.

Posted at 7:00 am

David Gelles
The New York Times

Half a century after founding outdoor clothing manufacturer Patagonia, Yvon Chouinard, the eccentric mountaineer-turned-billionaire thanks to his unconventional approach to capitalism, sold his company.

Rather than sell the company or take it public, Yvon Chouinard, his wife and two adult children transferred their approximately $3 billion ownership of Patagonia to a specialized trust and non-profit organization. They were created to maintain the company’s independence and ensure that all of its profits – approximately $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 increasingly under scrutiny, their talk of making the world a better place often overshadowed by their contribution to the problems they purportedly aim to solve.

Mr. Chouinard’s relinquishment of the family fortune is consistent with his long-standing disregard for business standards and his lifelong love of protecting the environment.

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

We will donate as much money as we can to people who are actively involved in saving this planet.

Yvon Chouinard

Patagonia will continue to operate as a private, for-profit company headquartered in Ventura, California, selling more than $1 billion in ski jackets, hats and pants each year.


PHOTO LAURE JOLIET, 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 Cost of Principles

In 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 foundation, overseen by family members and their closest advisors, is designed to ensure Patagonia meets its commitment to run a socially responsible business and distribute its profits. Because the Chouinards donated their shares to a trust, the family pays about $17.5 million in taxes on that donation.

The Chouinards then donated the remaining 98% of Patagonia, or their common stock, to a newly formed nonprofit called the Holdfast Collective, which will now receive all of the company’s profits and use the funds to help fight climate change. Because the Holdfast Collective is a 501(c)(4) organization that allows it to make unlimited political contributions, the family did not receive a tax benefit on their donation.

“It cost them a lot, but it was a cost they were willing to bear to ensure this company stayed true to its principles,” said Dan Mosley, a partner at BDT & Co, a merchant bank that works with very wealthy people , including Warren Buffett, and who helped Patagonia design the company’s new financial structure.

And they didn’t get any donation deduction for it. There is not the slightest tax advantage here.

Dan Mosley, Partner at BDT & Co

Barre Seid, a Republican donor, is the only other recent example of a wealthy business owner who has donated his business to philanthropic and political causes. But Barre Seid took a different approach, donating 100% of his electronics business to a nonprofit, and made a huge personal tax gain when he donated $1.6 billion to fund conservative causes, including efforts to prevent action on climate change .

A unique story

By donating most of their wealth during their lifetime, 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 charitable families in the country.

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

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

It’s an irrevocable commitment. You can’t take it off and you never want to take it off again.

Dan Mosley, Partner at BDT & Co

For Mr. Chouinard it was even easier; In this way, the issue of successor planning was resolved satisfactorily.

“I didn’t know what to do with the business because I never wanted a business,” he said of his home in Jackson, Wyoming. I didn’t want to be a businessman. Now I could die tomorrow, the company will do the right thing for the next 50 years, and I don’t need to be here. »

“It might actually work”

In a way, Mr. Chouinard’s expropriation of Patagonia is not all that surprising.

As a rock climbing pioneer in California’s Yosemite Valley in the 1960s, Mr. Chouinard lived outside of his car and subsisted on battered nickel cans of cat food.

To this day, he wears tattered old clothes, drives a battered Subaru, and splits his time between humble homes in Ventura and Jackson. Mr. Chouinard does not own a computer or a mobile phone.

Founded in 1973 by Mr. Chouinard, Patagonia has grown into a company that reflects his own and his wife’s idealistic priorities. The company was an early adopter of any type of product or practice, from organic cotton to on-site childcare, and became famous for discouraging consumers from purchasing its products. An advertisement from Patagonia will be remembered in particular New York Times on Black Friday, who said: “Don’t buy this jacket. »

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


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

But while Patagonia’s sales soared, Mr. Chouinard’s net worth continued to soar, creating an awkward situation for an outsider who loathes excessive wealth.

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

Yvon Chouinard

classification forbesthen the COVID-19 pandemic, helped set in motion a process that has taken place over the past two years that ultimately led the Chouinards to sell their company.

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 willing to sell the company.

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

The ideal solution

Now that the future of Patagonia’s assets is clear, the company must realize its grand ambitions of running a profitable business while fighting climate change.

Some experts warn that without the Chouinard family’s financial involvement in Patagonia, the company and affiliated companies could lose sight of their purpose. Although the children remain Patagonia employees and the Chouinards have enough to live comfortably, the company will no longer distribute profits to the family.

“What makes capitalism successful is its pursuit of success,” said Ted Clark, executive director of the Northeastern University Center for Family Business.

If you remove all financial incentives, the family will have essentially no interest other than a nostalgia for the good old days.

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

Regarding the Holdfast Collective’s distribution of profits in Patagonia, Chouinard said much of the focus will be on nature-based climate solutions, such as B. the conservation of wild areas. As a 501(c)(4) organization, the Holdfast Collective will also be able to draw on Patagonia’s experience funding grassroots activists, but will also be able to lobby and donate to political campaigns.

For the Chouinards, this settles the question of what will become of Patagonia after the founder’s death and ensures that the company’s profits are used to protect the planet.

“I am very relieved to have my life in order,” said Mr. Chouinard. For us it was the ideal solution. »

This article was originally published in New York Times.

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