Many tech startups find ways to reward their initial complement of employees with stock in their nascent venture. As and if the company succeeds, that stock award often renders these folks wealthy beyond their imagination. (Our firms were tech-type firms; we never went public, but did award phantom stock to our initial crew- and continually to our key staff. It was a way for those folks to garner benefits as we grew. [OK. We did have one firm that almost went public, but the underwriters absconded with the funds. All we were left with was egg on faces- and a series of discussions with federal and state regulators.])

However, most other companies don’t proffer such benefits to the employees that help the founder(s) achieve success. For example, many of the firms I’ve helped grow 20x to 50x over the course of a few years never once offered the staff who worked long hours or gave up weekends, any of the benefits the founders accrued. [I actually had to lean on one of them to remind the entity that salaried employees making less than $ 30K were due overtime pay.]

But, now there is one company that has many of our press mesmerized. Hamdi Ulukaya has worked hard and managed to grow his new venture, Chobani, the firm that initially defined the Greek yoghurt market segment, dramatically. And, it is possible that this firm is currently worth some $ 3 billion- if it goes public. Not bad for a company that started in 2005 and currently has approximately $ 1.6 billion in annual turnover.

And, Ulukaya has offered his 2000 full-time staff stock in the firm. In particular, they’ve been awarded 10% of the stock if he sells the company- or if the company goes public. Like the offer we made to our staff, this Chobani “stock” is phantom stock. (He actually calls them “Chobani Shares”, which are really award units or phantom stock.) As would have been true for our firm, should Chobani go public or is sold to another entity, these units will then convert to cash or stock. That means that these folks could be getting about $ 150K apiece. (This is the average for all 2000 staff.) Or, of course, if the company fails to perform,  this award will be essentially worthless. And, don’t forget- these award units provide no voting rights in the company.

This offer meshes with Ulukaya’s promises that he would donate half his wealth. He also advocates that business leaders  hire refugees. (Ulukaya is a Turkish immigrant. Yes, he produces Greek yoghurt.) Ulukaya actually told his employees that this award is not a gift, but a “mutual promise” to work together, “to be part of this growth”… “to be the driving force of it”.

Sounds great, doesn’t it? And, to be honest, it is a fantastic offer for his employees.
But, don’t get blown away by Ulukaya’s altruism. Because it is clearly NOT due to altruistic tendencies, his desire to reward his employees, or to keep his promise. (Sure, a little bit of it is.)

This award is to obstruct the ability of TPG Capital to be fully rewarded for its major contribution to the development and growth of Chobani. The goal of these “Chobani Share” awards is to thwart the ability of TPG Capital to obtain the fair stake in the company it probably deserves.

You see, Chobani spent a boatload of cash in 2013 to expand its production capacity. Which was followed by a major screw-up (that same year), when Chobani had to make a major recall, due to product contamination. Chobani turned to TPG Capital, which anted up a $ 750 million loan. That loan not only is to be repaid, but was attached to warrants that afford TPG the ability to obtain 20% of the ownership of Chobani. Now, that won’t be possible. Sure, they will obtain ownership- but not the 20% they were promised, instead a significantly smaller ownership slice.

The stock offer also means that any potential unionization effort at the facility could be thwarted. After all, unions are rarely the norm for owners of a firm.

So, despite how the media reports this – and similar events- there often is way more to the story. Which kind of negates the fairy tale the media wants to spin. (OK. The fairy tale was really created by Ulukaya, but the press was more than willing to spread the fairy dust.)

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