business news in context, analysis with attitude

by Kevin Coupe

The New York Times reports this morning that Greek yogurt company Chobani has awarded shares in the company to the 2,000 full-time employees who work for the upstate New York-based company.

According to the story, "Chobani employees received the news on Tuesday morning. Each worker received a white packet; inside was information about how many Chobani shares they were given. 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."

Hamdi Ulukaya, the Turkish immigrant who founded Chobani in 2005 and built it into a company probably worth several billion dollars, tells the Times, “I’ve built something I never thought would be such a success, but I cannot think of Chobani being built without all these people ... Now they’ll be working to build the company even more and building their future at the same time."

The Times makes several points about the move:

• "The shares given to Chobani employees are coming directly from Mr. Ulukaya. The shares can be sold if the company goes public or is bought by another business, neither of which seems imminent. Employees can hang onto the shares if they leave or retire, or the company will buy them back."

• "The transfer of money by Mr. Ulukaya touches on a hot-button economic issue: the rapidly expanding gap in pay between executives and average workers. The United States has one of the widest pay gaps, and the topic has played a prominent role in this year’s presidential race, particularly among the Democrats."

I think this is great.

One employee tells the Times, “It’s better than a bonus or a raise ... It’s the best thing because you’re getting a piece of this thing you helped build.”

Which is precisely the point.

Too many CEOs are rewarded - handsomely, with little apparent ceiling - in part based on their ability to drive down labor costs. They drive efficiencies, argue against wage increases, lobby against increased minimum wages, and sometimes do so out of the belief that only a company's top managers are entitled to be entitled. They ignore the possibility that front line employees who are paid more, not less, and who have a real, tangible stake in the company for which they work, will help to build the company.

Chobani's decision is an Eye-Opener.
KC's View: