"To become a worker-owner at Equal Exchange, you are required to buy your ownership share, which currently costs $3,250 (the amount is adjusted for inflation each year). To ensure that all employees can afford to buy their share, Equal Exchange offers a four-year no-interest loan for share purchase. When employees leave, they must sell their share back to the cooperative. In addition to voting rights, the employees are entitled to a share of the profits. At the end of each year, 40% of the after-tax profits (or losses) are allocated to the workers. Last year, each worker’s share was approximately $5,000. The remaining profits stay in the company as retained earnings. The company has been profitable every year but one for the last twenty years.
When the company needed to bring in outside capital, it created a second class of shares – a non-voting share. These shares were originally priced at $25 (the price was increased to $27.50 after demonstrating a track record for paying reasonable returns). After an initial offering to friends and family, the company sought out accredited investors to purchase shares in private offerings. In exchange for their investment, the non-voting shareholders receive an annual preferred dividend (paid before the workers receive their patronage dividend). The board decides each year how much the dividend will be, with a target of 5%. Most investors choose to reinvest their dividend in non-voting shares. The investors may redeem their shares after five years."
Jenny Kassan blogs about Equal Exchanges innovative capitalization, and the mechanisms in place to "give non-voting investors comfort that the interests of the voting shareholders (the employees) are aligned with their interests." More about investing in Equal Exchange.