REI Workers Test The Retailer’s Co-Op Identity

The outdoor retailer REI wants you to know it isn’t a typical corporation — it’s a consumer-owned cooperative, with values beyond just making money. Lest you forget, REI puts “co-op” on its store signs. It sells “co-op”-branded bikes, sleeping bags and bear cans. And it invites you, the cooperative member, to vote in its board of directors election every year to “set the direction of the co-op.”

But if the members don’t like where REI is headed, how much power do they actually have to change course?

A union for REI workers wants to find out.

The United Food and Commercial Workers union is promoting two pro-labor candidates for the ballot in REI’s board elections slated for March. The UFCW and its sister union, the Retail, Wholesale and Department Store Union, have organized 11 of REI’s roughly 190 stores since 2022 in a workplace battle that’s prompted union-busting allegations and shaken the company’s progressive reputation.

Though anyone can nominate themselves to serve on the retailer’s board, that doesn’t mean their name will end up on the ballot. The final candidates are selected by the board’s “nominating and governance committee,” which ultimately provides members a menu of potential directors to choose from.

In other words, the REI board decides who can sit on the REI board. And that’s a big problem for workers like Sue Cottrell, who believes the company has strayed from its roots. She wants new board members who will bring fresh perspectives and moderate REI’s opposition to the union campaign under its outgoing chief executive, Eric Artz, who’s expected to retire in March.

“We don’t really have a voice in who gets to be on the board — the people who end up on the ballot have been chosen by the current board,” said Cottrell, a 70-year-old employee at REI’s store in Bellingham, Washington. “They’re cherry-picking who they want.”

‘What Having A Co-Op Means’

Last year, union supporters urged co-op members to forgo backing any particular candidate and vote “withhold” in protest of the process. This time, they are stumping for two names to make their way onto the ballot.

One, Shemona Moreno, is the director of the climate advocacy group 350 Seattle, based right in REI’s backyard. The other, Tefere Gebre, is the chief program officer at Greenpeace and a labor leader who previously served as the AFL-CIO labor federation’s executive vice president.

Both are explicitly running to influence the company’s position on unionization and working conditions. Whatever their qualifications, they will need the blessing of the board’s nominating committee, which is why the UFCW is promoting their candidacies and asking backers to sign petitions in support. The union hopes a strong show of support from co-op members could force the board’s hand and get one or both on the ballot.

Moreno said she’s kept a close eye on the union effort, in which workers have filed unfair labor practices accusing REI of breaking the law. She told HuffPost the company is due for some soul-searching and hopes a board challenge will induce it.

“You need to really, truly re-evaluate the values of what having a co-op means and make sure that you live those values,” said Moreno, whose group has turned out in support of the REI union at protests. “If you’re gonna say it, then you need to live it.”

Gebre said his goal isn’t to create “havoc” but to bring a new viewpoint.

“In a lot of boardrooms … workers are seen as an expense instead of as an asset,” said Gebre, who fled violence in Ethiopia as a child and later rose through the ranks of U.S. organized labor. “You need someone in the boardroom to take the us-versus-them attitude out of it. Because right now … REI already is at war with its employees.”

REI denies it’s broken the law and says employees are free to organize. Although none of the unionized stores have achieved a collective bargaining agreement, REI insists it is negotiating in good faith. The company is represented by Morgan Lewis, the same management law firm whose attorneys are arguing on behalf of SpaceX that the federal labor board is unconstitutional.

An REI spokesperson said the company’s board weighs “multiple factors” to identify the best candidates but considers “exceptional business judgment and decision-making skills” to be essential. It also expects board members to be “first and foremost co-op members.” Gebre said he became an REI member last year, and that his wife has been a member since 2001. Moreno said she’s been a member since 2016.

“We look for candidates with proven business acumen and relevant experience operating in organizations of similar size and scale to REI; a demonstrated history of innovation and disruption, particularly in the retail industry; and the skills to be an effective board member,” the REI spokesperson said in an email.

Asked specifically about the pro-union candidates, the spokesperson said the board is considering Gebre but not Moreno.

The company maintains that it did not receive Moreno’s application. Moreno shared with HuffPost a copy of her email to the board, with her application attached, dated the morning of Oct. 10, 2024, which was listed as the deadline on the application form. When HuffPost shared a screengrab of that email with REI, the company still said she was not under consideration.

“Unfortunately, we have no record of this email,” the spokesperson said.

Moreno said more than 3,000 people had signed a petition supporting her candidacy.

“The best-case scenario is someone didn’t check their spam folder,” she said of REI. “The worst-case scenario is REI is afraid of a pro-staff candidate for [the] board. This is not the REI I know and love. I applied to run for the board to be a voice for the people in green vests who make REI great but who are not allowed a voice on the co-op’s board of directors.”

‘No Roadmap’

REI says its cooperative origins stretch back to 1935, when a group of Seattle mountaineers started pooling their money to get their hands on expensive climbing axes. Lifetime membership back then cost $1; today it’s $30 and comes with a 10% reward on purchases at the end of the year, to be used as an REI discount.

Allegations that REI is no longer a co-op in spirit predate the union campaign by at least a couple of decades. A 2003 Seattle Weekly story portrayed a profit-driven and opaque corporation that wouldn’t divulge its then-chief executive’s compensation. “Who Owns REI?” the story asked. “It can’t be the members.” (REI now makes executive pay public. Artz made $2.7 million in 2023 and topped $4 million in previous years.)

The board of directors has been central to these critiques, since its gatekeeping powers can make it difficult for dissenting voices to mount a challenge to leadership and push for change. It used to be that a candidate could bypass the board’s nominating committee by gathering signatures from 1% of REI’s membership, but that provision no longer appears in the co-op’s bylaws. (The REI spokesperson said no board members were available for an interview.)

Larry Cunningham, director of the University of Delaware’s Weinberg Center for Corporate Governance, said board nominating committees are a common feature at public companies as well. But unlike with a public company, there is no clear route at REI for a board proxy fight, a well-established process in which dissidents can try to oust sitting board members.

In other words, don’t assume it’s easy to hold directors accountable just because it’s a co-op.

“There’s no mechanism in this document or in this culture that’s like the proxy contest. That’s the big difference,” said Cunningham, who reviewed REI’s bylaws at HuffPost’s request. “The public company path is very highly regulated; people know the rules of the road. Here, they have to go grassroots, and there’s no roadmap.”

Whereas public companies are explicit about maximizing value for shareholders, the mission at REI is a little squishier. Under a section outlining the co-op’s principles, REI’s bylaws give a nod to fostering environmental stewardship, being a “responsible” corporate citizen and maintaining an “excellent workplace.”

Yet no such language is found in the section outlining what the nominating committee’s considerations should be for would-be directors. It merely promotes a view toward “depth of experience and diversity.”

Cunningham called this conflict “a defect in the document” that muddies the board’s mission.

“Someone should fix the way those bylaws are read,” he said.

REI’s board is heavy on executive management experience. Its current chair, Chris Carr, is the former chief operating officer of the fast-casual salad chain Sweetgreen and a former Starbucks executive. The chair of its nominating committee, Ted Philip, is a former Walt Disney Co. executive who also sits on United Airlines’ board.

REI directors are paid $125,000 a year, with an additional $25,000 to $50,000 for those serving as chairs. REI says that compensation is necessary to attract talent but still “below the median for comparable companies.”

It seems REI’s board wasn’t always so chock full of MBAs. A 1993 Seattle Times article said the company’s directors included a local emergency room nurse, an Alaska-based climbing guide and an Idaho “civic activist,” among others. The pay back then was nothing like today. In 1996, REI members narrowly rejected a proposal to hike director compensation — voting to keep it at just $3,832 a year. Significant pay hikes came later.

The REI board holds a meeting every spring where the directors answer questions and update members on the company’s shape. Members can petition to put proposals on the agenda for a member vote, which, in theory, could be a pressure point on unionization. But there’s a catch: A third of the board must agree to put said measure on the meeting’s ballot.

That bottleneck makes it harder to hold the board accountable, said Blair Orr, an REI member since 1972. Orr is a retired professor of forest economics in Michigan who’s been involved in various co-ops over the years. He decided to take a close look at REI’s bylaws after reading about the organizing campaign.

“You look at the REI structure and there’s no way to directly have an impact,” Orr asserted. “Everything has to be approved by the board of directors.”

He wonders if it’s time REI stops carrying on as a co-op, becomes a public company and starts issuing stock.

“If you’re going to point to it,” he said of the co-op status, “then you ought to live by it.”