Equal Exchange's trading principles are not just platitudes or vision statements, but are day-to-day rules, procedures and policies that govern how the company operates, including the way we finance our growth.
Capital Structure
Equal Exchange is structured as a for-profit, worker-owned cooperative. Every worker-owner invests in the company and, from time to time, we also raise money from outside investors. The paragraphs below explain how our capital structure works, the performance of investments and how we remain accountable to our mission.
Worker-Owners Investors: After working one year employees are eligible to become worker owners. Each worker-owner purchases one share of Class A Common Stock (valued at $2,750) and has one vote. Worker-owners elect the board of directors, which consists of six worker-owners and three outsiders.
Outside Investors: We attract investors who believe deeply in our mission and today have over 300 outside shareholders. Together they have invested over $3,000,000 and have funded much of the growth at Equal Exchange. They invest a minimum of $5,000 in Class B Preferred Stock and receive an annual dividend targeted at 5%. Shares of Class B stock do not have voting rights. In 2004 Equal Exchange took five outside investors to El Salvador to see the consequences of their investment. We strive to demonstrate to investors to the tremendous good they can do with their money.
Accountability: We believe we are accountable to the Equal Exchange mission: if the company were ever sold, any proceeds above repaying investors would be distributed to other alternative trade organizations. We are not in this to get rich! We are also accountable for our financial decisions: after shareholders receive dividends worker-owners get a percentage of any remaining profits, half of which is reinvested in the company. However if we make a loss a percentage of that loss is also deducted from worker-owner investments. In 1998, when we made a loss, worker owner accounts went down, while investors were paid a small dividend. So worker-owners get the voting shares – but also the accountability that comes with it.
Lenders: We are fortunate to have the support of many religious orders and social foundations that have extended to us low interest loans totaling approximately $1,000,000. In addition, Equal Exchange has lines of credit with a Cooperative loan fund and a UK fair trade lender for nearly $3,000,000.
To learn more about our innovate capital structure check out our Capital Blog: Coin and the Common Wealth
A Heritage of Performance
We are proud to say Equal Exchange has declared and paid dividends every year for 16 consecutive years. The target is 5% but dividends may vary depending on the company's performance. In 1996 Equal Exchange paid an 8% dividend, reflecting our exceptional performance and our desire to share that success with our shareholders. In 1998, when we incurred a modest loss, we paid a dividend of 4%. There is no guarantee that the board of directors will authorize dividends in any given year.
We are in this for the long run and seek investors whose intention is to invest in the company for five or more years. Never-the-less a time will come when investors may wish to cash out. Equal Exchange shares have a fixed price, meaning when you want to redeem shares (i.e. sell them back to the company) you will receive the same price you paid. In 14 years we have redeemed over 40 shareholders though the board has the right to postpone redemption if the company is in financial difficulties.
To learn more about our past performance please review our annual reports
Your Investment at Work
Before we sell a pound of coffee, we must first buy it, ship it to the US, roast it and deliver it to stores. This takes money. So as we grow we seek new funds from investors and lenders. In 2004 much of that money went to buy green unroasted beans: 3.7 million pounds of them.
$2,000 buys the green bean harvest from a small family farm, which typically supports 6-8 people. So a $10,000 investment buys the crop of five farms, giving hope and livelihood to perhaps 30 people - children, grandparents and all - on a steep mountainside in Western El Salvador. Or Southern Peru.
Having paid a fair price to the farmers we roast and package the coffee and sell it for a fair price to consumers. Out of that we make a small profit, enough to give investors a fair return for the use of their money.
Next harvest we will do it all again, as we have for the last 19 years. And with the continued support of investors and consumers we will buy from five more family farms, and the ten more, and then yet fifty more. These tiny steps to a more decent world, taken dollar-by-dollar and farm-by-farm, are your investment at work.
What our investors Say
"Equal Exchange is both a cutting-edge pioneer and, because of its track record, a veteran in its pursuit of doing good in the world of foreign trade and doing well for its shareholders. Equal Exchange walks its talk as it forges meaningful relationships with its trading partners abroad and its investors at home."
- David Friedman, Boulder, CO
"Equal Exchange was appealing to me as a new for-profit social change model, as a leader in the fair trade movement, and as a group of committed, trustworthy individuals."
- Joel Solomon, Renewal Partners Venture Fund, Vancouver, BC
"I invested in Equal Exchange after I saw, firsthand, the vital support that they provide to Nicaraguan farmers. You would have to look hard to find an investment where your stock paid more social dividends than Equal Exchange."
- Carter Garber, Decatur, GA
To learn more about investing in Fair Trade, please contact
Alistair Williamson, Investment Coordinator
invest@equalexchange.coop
508-427-5252
Capital Team
Equal Exchange, Inc.
50 United Drive
West Bridgewater, MA 02379
THE DESCRIPTION OF SECURITIES ABOVE IS A DESCRIPTION OF SECURITIES OFFERED IN THE PAST. IT IS NOT A SOLICITATION FOR INVESTORS OR AN OFFERING OF SECURITIES. PLEASE NOTE THAT PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE INFORMATION IS GIVEN AS OF THE DATE OF THIS POST. ALTHOUGH THE COMPANY ATTEMPTS TO KEEP THIS WEBSITE UP TO DATE, IT HAS NO LEGAL OBLIGATION TO UPDATE THE INFORMATION PROVIDED.
THE DISCUSSED ABOVE, INCLUDING ANY DISCUSSION OF EQUAL EXCHANGE, INC.'S (THE COMPANY'S) ANTICIPATED OPERATING RESULTS AND FUTURE EARNINGS, INCLUDING STATEMENTS ABOUT THE COMPANY'S ABILITY TO ACHIEVE GROWTH AND PROFITABILITY, CONTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED. THE COMPANY'S OPERATING RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS INDICATED BY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY'S OPERATING RESULTS MAY BE AFFECTED BY CHANGES IN TECHNOLOGY, THE EFFECT OF FOREIGN POLITICAL UNREST, THE ABILITY TO HIRE, RETAIN, AND MOTIVATE, TECHNICAL, MANAGEMENT, AND SALES PERSONNEL, THE RISKS ASSOCIATED WITH THE FEASIBILITY AND MARKET ACCEPTANCE OF NEW PRODUCTS, THE EFFECTS OF CHANGING COSTS, EXCHANGE RATES, AND INTEREST RATES.
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