Half a century after founding outdoor clothing maker Patagonia, Yvon Chouinard, an eccentric rock climber turned reluctant billionaire with an unconventional take on capitalism, has sold the company. The New York Times reports: Rather than sell the company or take it public, Mr. Chouinard, his wife and two grown children have transferred their ownership of Patagonia, valued at about $3 billion, to a specially created trust and nonprofit organization. They were created to preserve the company’s independence and ensure that all of its profits — about $100 million a year — are used to fight climate change and protect undeveloped lands around the world. The unusual move comes at a time of increased scrutiny from billionaires and corporations whose rhetoric about improving the world is often overshadowed by their contributions to the very problems they claim to solve.
At the same time, Mr. Chouinard’s rejection of the family fortune is consistent with his long-standing disregard for business norms and his lifelong love of the environment. “Hopefully, it will influence a new form of capitalism that won’t end up with a few rich people and a bunch of poor people,” Mr. Chouinard, 83, said in an exclusive interview. “We’re going to give the maximum amount of money to people who are actively working to save this planet.” Patagonia will continue to operate as a privately held, for-profit corporation based in Ventura, Calif., selling more than $1 billion worth of jackets, hats and ski pants annually. The Chouinards, who controlled Patagonia until last month, no longer own the company.
In August, the family irrevocably transferred all of the company’s voting shares, equivalent to 2 percent of the common stock, to a newly formed entity known as the Patagonia Purpose Trust. The trust, which will be overseen by family members and their closest advisers, is designed to ensure that Patagonia fulfills its commitment to conduct socially responsible business and give back its profits. Because the Chouinards donated their stock to the trust, the family will pay about $17.5 million in taxes on the gift. The Chouinards then donated the remaining 98 percent of Patagonia’s 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 fight climate change. Because the Holdfast Collective is a 501(c)(4), which allows it to make unlimited political contributions, the family received no tax breaks for their donations. Mr. Chouinard is certainly not like most ultra-successful entrepreneurs today. The report noted that he “wears old tattered clothes, drives a beat-up Subaru and spends his time between modest homes in Ventura and Jackson, Wyo.” He also has no computer or mobile phone.
As the company’s sales soared and Mr. Chouinard’s net worth continued to grow, he became uneasy because he hates excessive wealth. “Forbes magazine listed me as a billionaire, which made me very, very angry,” he said. “I don’t have $1 billion in the bank. I don’t drive Lexus.” That rating, along with the Covid-19 pandemic, “helped set in motion a process that would unfold over the past two years and eventually lead to the Chouinards divesting the company,” the Times reported.
