Chobani employees were treated to a pretty sweet perk this week.
On Tuesday, the Greek yogurt company announced that it would be granting its employees ownership shares worth up to 10 percent, if the company is ever sold or made public in an IPO.
“This isn’t a gift,” Chobani founder and chief executive Hamdi Ulukaya wrote in a letter to employees. “It’s a mutual promise to work together with a shared purpose and responsibility. To continue to create something special and of lasting value.”
The deal is significant enough that some of Chobani’s 2,000 full-time employees could become millionaires. Each employee will get shares based on their tenure at Chobani, with the average employee stake worth an estimated $150,000. Other shares could be much larger, totaling $1 million or more. Chobani was valued at approximately $3 billion in 2014.
The Chobani shares come directly from Mr. Ulukaya, a Turkish immigrant who founded Chobani in upstate New York in 2005. His portion of the company will become more diluted as a result, although he will still own the vast majority.
The announcement comes as the widening pay gap between executives and regular workers has come under intensifying scrutiny in recent years. In the United States, the typical CEO's pay is approximately 204 times that of the median worker, according to a 2015 report from Glassdoor.
In the United States, wealth inequality writ large has become a significant political issue. Although wages have increased in recent months, the gap in earnings between the very wealthy and the lower classes widened in 2015.
Chobani has long had a reputation for paying its employees above the minimum wage and giving them generous benefits, but the step of giving employees ownership of the company is a more unusual one. An estimated 7,000 companies in the United States, a small share, have some form of stock benefit plan for employees, according to a March report on worker-owned businesses from the Surdna Foundation.
There are a a few other notable examples in the food industry. In 2010, Bob Moore, who founded the health-food supply Bob’s Red Mill Natural Foods with his wife in 1978, shifted ownership of the company to his employees while maintaining a regular operational role in the firm.
Chobani is making the move before TPG Capital, the investment firm that gave the yogurt company a $750 million loan in 2014, has an opportunity to purchase a stake in the company. In 2012, Chobani ran into financial difficulties when it built a processing plant in Idaho for expanding into new yogurt product areas. The plant, which cost $450 million to build, encountered issues with public health officials. Chobani later improved its food safety practices and streamlined its operations. The ownership shares that give Chobani employees a 10 percent stake in the company dilute TPG’s potential stake.
Providing ownership shares isn’t the only area where Chobani has been innovative when it comes to worker treatment.. Over the past five years, the company has made a point of hiring refugees, a practice that Ulukaya has said “[hasn’t] just helped build our business; [it’s] helped improve our community.” In 2015, Ulukaya founded the Tent Foundation, which funds refugee relief efforts.