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A windfall for Chobani employees: Stakes in the company

Hamdi Ulukaya (right), with employees after announcing that he was giving them shares worth up to 10 percent of the company.
Hamdi Ulukaya (right), with employees after announcing that he was giving them shares worth up to 10 percent of the company.Alexandra Hootnick/The New York Times/NYT

NEW BERLIN, N.Y. — The 2,000 full-time employees of the yogurt company Chobani were handed quite the surprise Tuesday: an ownership stake that could make some of them millionaires.

Hamdi Ulukaya, the Turkish immigrant who founded Chobani in 2005, told workers at the company’s plant here in upstate New York that he would be giving them shares worth up to 10 percent of the company when it goes public or is sold. The goal, he said, is to pass along the wealth they have helped build in the decade since the company started. Chobani is now widely considered to be worth several billion dollars.

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“I’ve built something I never thought would be such a success, but I cannot think of Chobani being built without all these people,” Ulukaya said in an interview in his Manhattan office.

“Now they’ll be working to build the company even more and building their future at the same time,” he said.

Chobani employees received the news 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.

Two years ago, when Chobani received a loan from TPG Capital, a private equity firm, the company’s value was estimated at $3 billion to $5 billion. At the $3 billion valuation, the average employee payout would be $150,000. The earliest employees, though, will most likely be given many more shares, possibly worth more than $1 million.

Rich Lake, lead project manager, was one of the original group of five employees Ulukaya hired for the plant in New Berlin. Lake said Tuesday that he did not expect Chobani shares to change his life much. “I’m not one for living outside my means,” he said.

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Rather, he said, the shares are an acknowledgment of what he and the other employees have put into Chobani. “It’s better than a bonus or a raise,” Lake said. “It’s the best thing because you’re getting a piece of this thing you helped build.”

The transfer of money by 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.

Some other executives have also taken this issue on themselves. A founder of Gravity Payments, a Seattle-based credit card payment processing firm, last year promised to pay a minimum wage of $70,000 to his 120-person staff within three years.

The shares given to Chobani employees are coming directly from 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 unusual announcement comes before TPG Capital, whose $750 million loan helped bail out Chobani, can buy a stake in the company. Tension between Ulukaya and TPG about the direction of the company emerged shortly after the loan deal.

TPG has warrants to buy 20 percent or more of Chobani’s shares, depending on targets set in the original deal it struck. But that percentage would now be calculated from the 90 percent of the remaining shares, after the 10 percent given to the employees, essentially diluting TPG’s potential stake.

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TPG declined to comment Tuesday.

Technology startups often pay employees partly in shares to help recruit them or to compete in a company’s early days for in-demand workers. Early employees of Google and Facebook became overnight multimillionaires thanks to such compensation.

But unlike many of those tech companies, Ulukaya is giving his employees a piece of the company after its value is firmly established.

Ulukaya will still own the vast majority of the company, though his portion will be diluted as well. He said that giving his employees a stake in the company’s success was among the terms he demanded when the deal with TPG was struck.