[reststep]

REI Article

[Dante]

For a long time I've argued REI acts like a for-profit corporation where no shareholder owns enough stock to control management or the Board of Directors. That's what REI is. Here's my favorite part of the linked article. DENNIS MADSEN AND I are having a civil but strained go-round over REI's refusal to share financial information. I own one share in this co-op, and because publicly traded companies like Nordstrom and Weyerhaeuser are required by law to make such information public, I think I have a right to see this stuff. Q: "You don't disclose certain financial information, such as executive compensation, which under law is freely disclosed for all publicly traded companies. It surprised me that in a company which is purportedly owned by consumers, that information is not available." A: "We don't disclose any. . . . " Q: "What's the rationale for that?" A: "Why would we want to?" Q: "Because we're democratic?" A: "I guess we'll disagree on that one. I can't think there's any reason we want to disclose confidential information like that—or about where the company is going or headed. . . . This is a highly competitive business, retailing is today. There are folks out there, across the nation, who are teeing up. The outdoor industry is the next thing that they want to go after. And for us to share sensitive information about the company to our competitors would compromise our ability to sustain this organization." UW BUSINESS ethics professor Jones rolls his eyes when I tell him REI won't disclose how much its officers are being paid. "Does your tape recorder capture me rolling my eyes? You can say, 'Professor Jones rolled his eyes when he heard that lame excuse.' "They don't want you to know how much they're making because they don't want it publicized. Is there any other reasonable conclusion to reach?" Says David Ortman, executive director of the Northwest Corporate Accountability Project and a longtime REI member: "It is disturbing to learn that REI is unwilling to make its financial information available to its members and the public. The basic definition of a cooperative is that of a jointly owned and democratically controlled enterprise. That means a co-op such as REI must be accountable to its members and to the public." "The most significant facts that investors have to judge a board by is how it pays management," says shareholder activist Bartlett Naylor, director of the Arlington, Va.-based Green Corporate Accountability Project and former chief investigative officer of the Senate Banking Committee. "If consumers own a cooperative, they may not risk their savings—but they play the role of owners in exercising control. In this way, basic information such as the financial health of a cooperative is central," says Naylor. "It should be complete and accessible. Lack of transparency can be fatal, as witnessed by the Enron scandal, where management took pains to shift significant liabilities 'off the balance sheet,' meaning they were unpublished to investors." (emphasis added)

[Dante]

For the record, I never assumed REI was anything but for profit, either. Based on the many anti-REI threads that have popped up, I think peoples opinions of REI are strongly colored by their experience there. A few bad customer service experiences have colored my opinion of REI. I'm not impressed with their house brand gear or with the knowledge of their sales people, either. All this makes me more critical than I might otherwise be. Now I try to give my business to smaller shops like Pro Mountain Sports or even Marmot or to buy online before patronizing REI. I still end up going there occasionally at the last minute before a trip for DEET or freese dried food because they are local and usually have what I need. BTW top marketing and communications executives from REI worked with the Enterprise Forest fee team in the design and implementation of that project (the fee demonstration project). LINK Later there were demonstrations at four REI stores. LINK REI subsequently withdrew from the Recreation Roundtable: a group consisting of recreation industry executives that was instrumental in pushing the Recreational Fee Demonstration Program. LINK

[Backpacker Joe]

[MCaver]

I had heard the co-op bit before, but as far as I'm conerned they're a private company with a customer rewards program.

[Stefan]

I worked in the finance department headquarters of REI. So I knew all the financial data. Basic gist is this of the operation: Last word in "REI" is "Incorporated". Not "Co-op". I think the change occurred in the 1950's. People vote with their dollars, and REI is doing very well. Good for them becuase they are offering something that many people are willing to pay for. As with the culture of any finance department we are very leery of distributing ANY financial data to anybody. Distributing such information can nip you in the butt later.........

[Mal Con]

They are a corporation but one of an unusual type. The members are the stockholders legally. They have significantly less rights than normal stockholders in public corporations. Public corporations are required to comply with state and federal securities laws that in turn require publication of all financial information. This is under criminal and civil penalties for noncompliance. REI is closer to a soviet republic than a capitalist republic or corporation. It is run by and for the bureaucrats i.e. officers. As the article says member input has ben effectively eliminated. This is not new and was one of the reasons Larry Penberthy started MSR. MEC is much closer to the spirit of a genuine Co-Op.

[kiliki]

I worked for PCC at one time and have way too much firsthand experience with people who think that co-op=democracy. A coop is a business structure (and as one poster already pointed out, REI is not even a co-op)-no more, no less. The funniest part about hearing the many many complaints of PCC members who thought that they should have a voice in how the business was run (which they actually did, to a certain extent) was that everyone had wildly different ideas about this. I can guarentee you that if REI gave members as much input as they'd like the business would be run into the ground in no time. The fact that REI gives me a dividend, has good sales and a great return policy is really all I ask from them.

[Steve]

I'll continue to buy from MEC and STP. REI has poor quality for much of their products and they are overpriced.

[Slugman]

I have always had good experiences shopping at REI. Example: My new Vasque boots($155). REI had the best overall selection, and I had a $30 rebate from last year, plus 10% off for using the dividend right away, plus this discount doesn't cost me my dividend next year, another 10%. All told the boots were $95 plus tax, and they are returnable even when used, if they turn out to give me blisters. (They don't). My Hennesy hammock got a tear in the mosquito netting, and they fixed while I shopped, instead of sending it back to the company(it was a small job). I am also very pleased with my REI brand backpack, which was far cheaper than comparable packs from other top makers(about 1/2 price). As far as the co-op thing goes, I belong to Costco but don't feel I have any direct say in that business, either. I can display my opinion there or any where by voting with my wallet.