Hamdi Ulukaya, the CEO of yogurt-maker Chobani, told his employees yesterday that they would be receiving ownership stakes in the company—a perk that could make long-time employees millionaires if the company ever goes public or is sold—the New York Times reports:
[Ulukaya] told workers at the company’s plant here in upstate New York that he would be giving them shares worth up to 10 percent of the company when it goes public or is sold. The goal, he said, is to pass along the wealth they have helped build in the decade since the company started. Chobani is now widely considered to be worth several billion dollars.
“I’ve built something I never thought would be such a success, but I cannot think of Chobani being built without all these people,” Mr. Ulukaya said in an interview in his Manhattan office[.] … “Now they’ll be working to build the company even more and building their future at the same time,” he said.
Chobani employees received the news on Tuesday morning. Each worker received a white packet; inside was information about how many Chobani shares they were given. The number of shares given to each person is based on tenure, so the longer an employee has been at the company, the bigger the stake.
Furthermore, the shares are coming directly from Ulukaya, whose ownership stake will thus be diluted. Employees will be able to keep their shares when they leave the company or retire, or they can sell them back to the company. The Times estimates that at a $3 billion valuation, the average employee award would be $150,000, with earlier employees’ shares potentially being worth more than $1 million. The Washington Post‘s Jena McGregor has more:
Ulukaya, a Turkish immigrant who has pledged to give away half his wealth and advocated for business leaders to do more to hire refugees[,] said in a memo to employees that the award was not a gift, but “a mutual promise to work together with a shared purpose and responsibility,” he wrote. “How we built this company matters to me, but how we grow it matters even more. I want you to be a part of this growth — I want you to be the driving force of it.”
Bruce Elliott, manager of compensation and benefits for the Society of Human Resource Management, called the move highly atypical. “It’s unusual to see that in food services and manufacturing,” he said in an interview. While it’s relatively common among startups in the tech industry, Elliott said, it’s rare to see founders offer employees such awards at this stage of a company’s growth. Chobani was founded in 2005 and has grown rapidly; after struggling with managing a plant expansion and a 2013 recall, it reached $1.6 billion in 2015 sales, according to Euromonitor.
Other companies, like Apple, have recently awarded shares to rank-and-file employees, and Twitter CEO Jack Dorsey gave a third of his stock to his company’s employees last fall. But outside the tech sector, and especially within the food industry, such benefits are rare. There’s a business case to be made as well though, as McGregor explains:
If employees end up holding substantial equity stakes, it can lead to more natural allies among investors, pre-empt unionization efforts, and create even more of a connection between workers and management, Elliott says. “It definitely creates an ownership culture,” he says. “It focuses not only management but employees on bottom line and top line figures.”