I don’t understand a few things specifically (and have questions about other info that might just not be available). What does it mean for the money to be put in a trust? Does that become available cash for the nonprofit? Does his personal net worth decrease by $3 billion? How much will the CEO or highest up now earn per year?
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It isn’t money (directly) put into the trust, it is the shares representing the controlling ownership of the company. Kind of like setting up a trust and putting a property into the trust. The trust now owns that property.
No, it is not directly available as cash unless the trust sells the share (which they are probably not allowed to do – depends on how the trust is set up). However, if the company (Patagonia) pays out dividends as cash to shareholders, that cash is available to the trust.
Yes, the person putting the property into a trust no longer owns that property and their net wealth is reduced accordingly.
There is no immediate or direct change to the compensation of the people that work for the company simply due to the transfer of the shares. Employees earn their salaries from the company, not the trust. The trust is a separate entity altogether. Although the trustees (as the controlling shareholder) will have a big say on the future compensation of the CEO through the Board of Directors.
* What does it mean for the money to be put in a trust?
So a “trust” is basically a “money holding thing” you can think of it as a bucket of money that you can give instructions to. So often you have people in charge of the trust (Trustees) whose job it is to follow the instructions outlined in the trust and give the money in the bucket to whoever it is supposed to go to. If they don’t follow the instructions they go to jail for embezzlement.
* Does that become available cash for the nonprofit?
The trust instructions in this case are going to be to use the income it takes in to fight climate change by giving money to nonprofits in developing countries. Nobody is allowed to take the money that the trust gets for themselves. That would be stealing. They are only allowed to make decisions about which climate-change fighting people to give it to
* Does his personal net worth decrease by $3 billion?
Pretty much, yeah.
By giving this valuable thing to a money-bucket his net worth goes down and the bucket’s goes up in the same way that if you give your teenager a $5000 car their net worth goes up by 5k and yours goes down.
* How much will the CEO or highest up now earn per year?
Probably the same amount.
The trust (money-bucket) will now own all the shares of the company that Yvon used to own, and therefore Trustees will have the right to sit in on shareholder meetings and vote for the interests of the trust. The trust wants Patagonia to do well and make a lot of profit so that it can give more of that profit away, so the trustees will probably vote at shareholder meetings to keep doing whatever the people who are running the company want to do. That includes paying executives whatever they feel they need to pay them to do their jobs really well.
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