Ben And Jerry's

12. PAGE and KATZ, The Truth about Ben and Jerry's

Found in 1978, Ben and Jerry’s was a company that was “fair to its employees, easy on the environment, and kind to its cows” (Page, Katz, 39). They introduced the idea of profit and people, an idea that Cohen and Greenfield called the “double dip.” In 2000, Ben & Jerry’s was sold to Unilever, a company described by one commentator as “a giant multinational clearly focused on the financial bottom line” (39). Co-founder Ben Cohen had an interview with NPR radio back in 2010, and he said that “the laws required the board of directors of Ben & Jerry’s to take an offer, to sell the company despite the fact that they did not want to sell the company” (39). Fellow co-founder Jerry Greenfield agrees,

stating “We were a public company, and the board of directors’ primary responsibility is the interest of the shareholders. … It was nothing about Unilever; we didn’t want to get bought by anybody” (39). However, I believe that Ben Cohen and Jerry Greenfield were not required to sell their company, something that jeopardizes their socioeconomic status in the eyes of the consumer regarding their business methods along with their reputation as businessmen. My paper will agree the points in which Anthony Page and Robert A. Katz present in their work “The Truth About Ben and Jerry’s” in their opinions regarding the business methods of Ben & Jerry’s, and their reputation as businessmen.
Ben Cohen and Jerry Greenfield both stated and agreed with each other that they did not want to sell the company. However, since they are a public company, their board of directors have the primary responsibility of satisfying the their shareholders. It was not about the money apparently, but it was about having to take the offer in order to satisfy their shareholders. Page and Katz break down the legal landscape of regarding the corporate law that forced Ben & Jerry’s directors to accept Unilever’s offer and sell the company. In practice, courts are respectful to board decision making. Under a doctrine called the business judgment rule, nearly all board business decisions are beyond judicial review. If there’s potential benefit to shareholders, the courts do not interfere with the sale. Also, the idea of an “obligation” is very unlikely, since though one might exist theoretically, it is not always the case that this obligation triggers a sale.
In the aspect of social and economic factors, the “forced” sale of Ben & Jerry’s to Unilever was one that was in no means forced. This is a decision in which gives the consumer a conflicted idea of how to perceive Ben Cohen and Jerry Greenfield’s business methods. As indicated by the interviews that Ben & Jen partook in, they talk about how they “had” to take the offer presented by Unilever, only because the company is publically owned, and it is in the best interest in the board to make an ultimate decision that satisfies the shareholders. Given that Ben & Jerry’s is a publically owned, you may conclude that they would have to sell that company. However, this is not the case here. Yes they are a publically owned company, and this means that the board has to make a decision to satisfy shareholders. But, they are not forced to make a sale by a law present in court. Since the business judgement rule, since there is no conflict of interest present in the sale, and the sale involves shareholders, the court can elect not to interfere in the sale. So, given that Ben & Jerry’s is in fact a company with a board of directors, their goal is to satisfy shareholders. However, if there is a potential benefit with the holders, the court can elect not to interfere with the sale. Therefore, Ben Cohen and Jerry Greenfield were not legally obligated to have the sale of their company approved in court.
Corporate law has been cited as the main reason for the Ben & Jerry’s sale.

Unilever’s purchase of Ben & Jerry’s serves as an example of how easily corporate command can undermine social responsibility. “‘The board was legally required to sell to the highest bidder,’ says [an attorney with expertise in social enterprise]” (39). The sale of Ben & Jerry’s to corporate giant Unilever wasn’t legally required, but because it was public they had no choice. It was not a legal obligation, but it Unilever’s purchase left Ben & Jerry’s with little choice since they were a public company. Page and Katz make a reference to a legislative report on SB 201, California’s Flexible Purpose Corporation act, which state that “The story of Ben and Jerry’s Ice Cream is an example of why a new entity form is sought” (40). Even though Ben and Jerry did not want to sell out, they had no

choice.
Most state legislatures have resisted the principles that which were brought up in the infamous Dodge v.

Ford case, one in which argues that “shareholder wealth maximization is not a modern legal principle” (41). By the time Unilever has approached Ben & Jerry’s in early 2000 regarding the acquisition, the company was well defended. Cohen and Greenfield, along with their lawyers and lobbyist, had taken many steps to prevent a hostile takeover. In addition to promoting Vermont’s enactment of a constituency statute, which allows corporate directors to consider non-shareholder interests when making business decisions, the company had adopted a “poison pill,” meaning the company wanted to make Unilever believe that they were a company that was not worth purchasing. To cancel a poison pill, Unilever would have had to either find a friendly board or get one elected. Because elections for Ben & Jerry’s board were sporadic, Unilever would have needed at least two elections scheduled a year apart to elect the board of its choice. In the case of Ben & Jerry’s, Unilever could not have elected a friendly board because of the power and influence held by co-founders Ben Cohen and Jerry Greenfield, along with director Jeff Furman. Since Ben & Jerry’s could have adopted a “poison pill,” it would have caused Unilever to have to try and elect a friendly board. However, it would not be the case that Unilever could elect a friendly board since director Jeff Furman held enough power to sway the

election one way or another. As a result, the “poison pill” idea could have been one that worked, which would have meant that Cohen and Greenfield would not have been forced to sell.
Although Ben & Jerry’s legal defending seemed impenetrable when dealing with their willingness to sell, the board still unanimously agreed to sell the company. This left many wondering why. Many claim that the two were ready to call it quits and make millions. When everything was all said and done, Cohen and Greenfield made close to $50 million from the sale. Not to mention, Ben & Jerry’s faced operational issues that a takeover could solve, such as product distribution. From the consumer standpoint, this is sort of a slap in the face, showing how easily the little guys can sell out to the big corporate giants when a large sum of money is involved. Cohen and Greenfield not only sold their shares, but in the process, sold out to Unilever, which discredits their credibility as good and responsible businessmen.
Though some believe that this sale caused Cohen and Greenfield to be labeled as sellouts, whose legacy as responsible businessmen was tarnished, others thought differently. They believe that Ben & Jerry’s was a responsible company, whose main goal was to do what was best for the economy and environment that surrounded them. Cohen and Greenfield were deeply committed to Vermont’s economy and environment. They purchased their supplies and different services needed for their company within the Vermont community, helping boost local economy. As the company’s need for capital increased, they sold stock to Vermont residents, giving power to the people of a local company that was a nationwide phenomenon at the time. With these actions, they lead many to believe that Cohen and Greenfield were not at all sellouts, but two very responsible, considerate businessmen who wanted what was best for their community, but in the end, had no other choice but to sell to Unilever.
Words speak louder than actions. Wait, that’s not how the phrase goes, it goes actions speak louder than words. The words of Ben Cohen regarding the sale of their company was, “the laws required the board of directors of Ben & Jerry’s to take an offer, to sell the company despite the fact that they did not want to sell the company” (39). Fellow co-founder Jerry Greenfield words were, “We were a public company, and the board of directors’ primary responsibility is the interest of the shareholders. … It was nothing about Unilever; we didn’t want to get bought by anybody” (39). Yet, one big action spoke louder than their words: a unanimous decision by the board, one that it highly influenced by the two co-founders based on the power they held. Legal law did not require them to sell their company, just because they’re a public company. They could have refused the sale, but instead, sold out to Unilever, and collected a cool $50 million.