At Chobani, Now It’s Not Just the Yogurt That’s Rich

It&#x27;s great to see a founder CEO (Hamdi Ulukaya) making a bold ethical move like this to support his employees. It&#x27;s not flashy or earth shaking, but it&#x27;s very real and it will definitely change many lives for the better.<p>This story reminds me tangentially of the time when Hewlett and Packard, when faced with a downturn at HP, decided to cut pay across the board so the company could avoid layoffs. Once HP recovered, I&#x27;m assuming they reinstated previous salary levels and then some. HP then benefited from a highly committed and skilled workforce who deeply respected their leaders and company.<p>Unfortunately, these stories reflect the (very rare) exception and not the rule. Today, we&#x27;re much more likely to see CEOs and executive teams earning (multiple) millions in salary and options, all the while they are outsourcing jobs, implementing layoffs, converting full-time jobs to contract and part-time jobs, and so on. These CEOs are extracting as much wealth as they can, at the expense of their employees.<p>We desperately need more ethical, bold leaders like Ulukaya, Hewlett, and Packard who are going to shape the future of business; a future that is kinder, compassionate, and community-minded.

Honestly I&#x27;m surprised this doesn&#x27;t happen more. While yes, it was a very kind gesture by Ulukaya to give his employees partial ownership, it also makes each of them much more involved in the long term success of the company. Putting a company on the stock market is selling it to people who are only interested in earnings for a few quarters at most, while employees will have interest in not only the growth of the company, but the sustainability of the operation.<p>At least that&#x27;s my impression of employee owned businesses, it seems like a smart economic move.

&gt; But unlike many of those tech companies, Mr. Ulukaya is giving his employees a piece of the company after its value is firmly established.<p>I wonder how they set this up tax-wise. Stock grants are income, even before you sell. In tech companies, you typically get the stock when it&#x27;s super cheap, so the tax hit is minimal. But here, since the value&#x27;s pretty firmly established, the employee is potentially on the hook for quite a bit. And depending on the details of the grant, it may not be possible for employees to sell off their stock to pay taxes.<p>There are several ways to solve this. The employees could be getting options (set up so taxes are deferred until they exercise). Or the company could just eat the tax themselves. But kind of curious which route they took.

Hamdi is an example ceo,<p>Here is some background information - don&#x27;t grt me wrong the move is great but as any great move there are a few more implications:<p>1) tpg loaned 750mn to bail out idaho plant to Ulukaya.<p>2) as part of the deal tpg has warrants against hamdi&#x27;s own stock.<p>3) tpg try to oust hamdi once, the gidt cements his role as a ceo as employee love and support to him is boosted.<p>4) tpg&#x27;s warrants are diluted since hamdi gave out 10% of his own stock. Essentially now the options can address 90% of hamdi&#x27;s stock.<p>AGain a great chess move.<p>Your move tpg.<p>Edir: typos due to mobile.

&gt;TPG has warrants to buy 20 percent or more of Chobani’s shares, depending on targets set in the original deal it struck. But that percentage would now be calculated from the 90 percent of the remaining shares, after the 10 percent given to the employees, essentially diluting TPG’s potential stake.<p>How did that happen? How would the 10 percent given to the employees not be included in the 20% of the TPG contract?

Thinking back to the fellow who gave all of his employees a raise to $70K, parts of that ended up going badly for him.<p>As a thought experiment, I wonder what might go well or poorly in this case?<p>The publicity is great. Employee loyalty from gratitude and vesting. It may afford a near-term competitive advantage from capabilities like increased willingness to work overtime or rallying together during an opportunity&#x2F;crisis. Real information may flow more freely as employees feel a safety&#x2F;pride of ownership and connection to management.<p>How will new employees feel about working alongside someone with much greater compensation? Existing employees may immediately face this - since shares were dolled out by tenure, employees with several years&#x27; tenure may see themselves as rich vs. newer folks and vice versa.<p>As vesting completes, experienced employees may depart as they become financially independent. Or perhaps the windfall will inspire lifetime loyalty.<p>Will there be problems at competitors, whose employees are marginally less satisfied, knowing their counterparts at Chobani are treated so well?<p>Overall an inspiring and kind program. I&#x27;m excited to see it play out.

&quot;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.&quot; which is nice compared to the usual class-based allocation.

I heard that the founder is Kurdish. Pretty interesting company.

Tippin my hat, nicely done...

Congrats, but I&#x27;m always blown away at the size of some companies. Do you really <i>need</i> 2000 people to make yogurt?<p>Airplanes are big complex systems, so I get that, but yogurt?<p>Edit: Apparently I rubbed some folks the wrong way. I didn&#x27;t mean to think I could do better, I just meant it&#x27;s a wild thought that something so &quot;simple&quot; as yogurt could require so many people to make.<p>You guys probably know about &quot;I, Pencil&quot;, but it&#x27;s a good read if you haven&#x27;t heard of it: <a href="http:&#x2F;&#x2F;www.econlib.org&#x2F;library&#x2F;Essays&#x2F;rdPncl1.html" rel="nofollow">http:&#x2F;&#x2F;www.econlib.org&#x2F;library&#x2F;Essays&#x2F;rdPncl1.html</a>

Chobani is poison. Insane amount of added sugar. Stay away from it.