Greek yogurt is known for being rich in flavor and protein. Now, some employees at Chobani could become rich themselves.
On Tuesday, founder and CEO Hamdi Ulukaya announced that he would be giving all of his 2,000 full-time workers awards that could be worth up to 10 percent of the privately held company’s future value if it becomes public or is sold. Each employee will be given “Chobani Shares,” or award units, based on workers’ tenure and role at the company, which could convert to cash or shares in the event of an initial public offering or a sale. The value of the awards are dependent on company performance, however, and have the potential to be worth nothing if the company doesn’t meet performance metrics.
The New York Times said that if Chobani was valued at $3 billion, the average employee payout could be $150,000, and some long-tenured employees could see windfalls possibly worth more than $1 million. (A Chobani spokesman declined to confirm those amounts.)
Ulukaya, a Turkish immigrant who has pledged to give away half his wealth and advocated for business leaders to do more to hire refugees, announced the news to workers Tuesday. He 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 for 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.
Ulukaya’s move comes before TPG Capital, which made an investment in Chobani in 2014 in the form of a $750 million loan, can buy a stake in the company, according to the New York Times report. The deal’s terms, according to reports from that year, included warrants that could give TPG an ownership stake of 20 percent or more. The award for employees would essentially dilute TPG’s potential ownership, the Times reported, though it also noted that Ulukaya said the employee award was among the initial terms of the deal.
A spokesperson said that the company’s offer to employees was “absolutely not” intended to dilute TPG’s potential stake, that the move was something Ulukaya had long wanted to do, and that the decision was fully supported by the board, which includes TPG representatives. A TPG spokesperson, reached via email, declined to comment.
Copy the Story LinkSend questions/comments to the editors.
Success. Please wait for the page to reload. If the page does not reload within 5 seconds, please refresh the page.
Enter your email and password to access comments.
Hi, to comment on stories you must . This profile is in addition to your subscription and website login.
Already have a commenting profile? .
Invalid username/password.
Please check your email to confirm and complete your registration.
Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.
Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.