- Chobani's 2,000 full-time employees recently learned that CEO Hamdi Ulukaya would be giving them ownership stakes worth up to 10% of the company when it either goes public or is sold, according to The New York Times.
- The number of shares each employee received was based on his or her tenure. Employees can sell those shares on private markets or wait for the company to file for an IPO or be acquired. Neither option is expected to be imminent, The New York Times reported.
- TPG Capital bailed Chobani out with a $750 million loan two years ago and has warrants to buy 20% or more of shares in the company. However, that percentage would now come from the 90% of company shares leftover after the employees' 10% stake, which dilutes TPG's potential stake.
The dilution of TPG's stake could have been part of the motivation behind the employee stake decision, as TPG and Ulukaya have not seen eye to eye on the company's future since the deal, according to The New York Times. Ulukaya still retains the vast majority of the company, but his stake is also diluted by this employee offer.
Employee stakes are not unheard of in the food industry — Bob's Red Mill, King Arthur Flour, and Full Sail Brewing are all employee-owned — but they are much more common in industries like technology. Early companies will offer employees stake in the company in lieu of higher compensation. If and when the company grows, such as Facebook and Google, these employees receive their due compensation later on. But Chobani is already an established company, valued at no less than $3 billion to $5 billion at the time of the TPG deal.
Distributing company shares among employees has a key strategy backing it up: motivation. With stakes in the company, employees become personally invested in that company's success. As sales slide for major manufacturers, getting employees more involved could spur innovation and growth for the company.
Employee-owned shares have financial benefits for the company too. Those employee stock contributions are tax-deductible, which means manufacturers have a new cash flow through the employee shares they issue.
Employee stakes come with their own risks. For early companies/startups, employees may end up holding onto shares (and paying taxes on them) that never end up amounting to anything. And for established companies like Chobani, the stock could tank from the original purchase price. That stake would lose value while potentially racking up a tax bill employees may not be able to recoup. Employees often prefer cash from manufacturers over riskier stock options.