To protect your brand, Invest in your stakeholders.

Milton Hershey

The story of the 100-year-old investment that saved Hershey.

As the clock neared midnight on September 17th, 2002, the tide was turning in a desperate fight to save an American icon.  The board of the Hershey Trust Company had gathered at the Valley Forge Hilton for a meeting that would end up lasting over 10 hours.  At stake was the future of The Hershey Foods Corporation and whether it would be sold to the Wrigley Jr Company for $12.5 billion.  Following the announcement of the proposed merger a few months prior, many had expected the sale to go through without much resistance from the trust.  However, in the final hour, the board of the trust voted 10 to 7 against the sale of the company. The rejection came as a surprise to many, sending Hershey’s stock down 12% the next day. Ironically the shift in the fight occurred not far from the turning point of the American revolution. This rejection would later come to symbolize what one man’s dedication to stakeholders could do for a brand 100 years later.

Although sustainability has become a buzzword used to represent corporate responsibility, it is very much an old concept.  In the beginning of the 20th century, numerous corporations built entire towns around their production facilities to provide stable conditions for their businesses to operate in. Providing homes, schools, hospitals, entertainment and stores for their employees helped companies to earn the loyalty of their workers during a period when unions were on the rise. A man by the name of Milton Hershey was one such entrepreneur who built his business on this model.


Milton Hersey

Milton founded the beloved chocolate empire in 1905, not far from where he grew up.  He chose the location due to its proximity to Pennsylvania’s dairy farms, allowing him to utilize the freshest milk in Hershey’s Chocolate. From the very beginning, Milton took more pride in the quality of his products and the community he helped to build than the profits his company generated.


Four years after the founding of the Hershey Foods Corporation, Milton and his wife Catherine founded a private institution to educate orphaned boys that would later become known as the Milton Hershey School.  Milton and Catherine were never able to have children of their own, and saw the school as an opportunity to raise the children they would never have. From the beginning, the school was placed under the management of the Hershey Trust Company, which was also the controlling shareholder of the Hershey Foods Corporation.  Dividends generated from the Hershey stock directly funded the school, eventually making the school one of the wealthiest private institutions in the world.  Today the school currently educates 1900 children in social and financial need and holds roughly $7.5 billion in assets.  Eventually donating all his wealth, Milton remained heavily involved in the school until his death in 1945.


Milton’s dedication to the community he built left a lasting impression on all stakeholders of the Hershey company.  Following the announcement of the proposed sale in July of 2002, the community immediately protested.  It came as no surprise that the town and employees would resist the sale, as it could negatively impact the economy of the small town. What the board had not anticipated was resistance from former CEO’s, executives, the state government and alumni of the Milton Hershey school.  Many of the alumni, born after Milton Hershey’s death, would go on to become successful leaders around the world.  However, his investment was such an important part of their lives that they felt obligated to defend the legacy of a man that they had never met.

Resistance against the sale would steadily grow until that fateful night on September 17th. While the board of the Hershey Trust and Hershey Foods Corporation was not focused on protecting the brand and legacy of the company, the stakeholders were. After fierce resistance, board members eventually got the message.

A few months after the rejected sale, 10 of the 17 trust board members were removed.  Among the 10 were the seven that voted for the sale.  The board was then reduced to 11 following the addition of four new members. The realignment was made to ensure that the vision of Milton Hershey would be protected. The result of this realignment would be seen 14 years later after a new suitor had risen to try to purchase the Hershey Company.

In June of this year, Mondelez International Inc made a $23 billion offer for the candy company. Mondelez, owner of the Oreo, Chips Ahoy, Nabisco and Triscuit brands, was seen by many analysts as wanting to use the merger as a means to avoid being acquired itself. The Hershey Trust immediately rejected the offer, having learned from past mistakes.

No one can say for sure whether the Hershey Company will ever be sold in the future. What has been proven is that the well-placed investments of a single man into a company’s stakeholders has the capability to preserve a brand for generations. Even after the Hershey Trust company was involved in a number of other scandals and controversies over the last 10 years, the brand has still maintained a large group of supporters that are willing to step in to rescue the legacy of a beloved brand if needed.

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