On June 17th the Impact Makers case settled after two months of litigation. As legal counsel and friend to the plaintiff Michael Pirron, I want to shed light on the significance of this lawsuit and its potential impact on the B Corp business community.
How Michael Pirron Lost His Own Company
Impact Makers is a Richmond, Virginia-based IT consulting firm with a revolutionary social enterprise model. Despite its overwhelming success, the business was jeopardized in April 2019 by a Board of Directors whose vision for the company did not align with its governing documents that were drafted to protect the company’s public benefit mission.
From the beginning, Michael built the company on an “all-profit-to-charity” model. In 2015, the B Corp achieved its initial goal to donate $1 million to charity. Michael decided to up the ante and donate all of the company’s equity (at that time worth $13.4 million) to two public charities: The Community Foundation of Greater Richmond and Virginia Community Capital.
In January 2018, the Board removed Michael as CEO and began taking the company in a different direction. In late 2018, the Board began pressuring Michael to resign from his position as Permanent Director – a position created to allow him to oversee Impact Makers’ direction and protect the gift to the community. When their efforts to oust Michael failed, in April 2019, the Board pushed through a sale of the $18.6M firm for only $1,000. Simply put, the Board violated Michael’s rights to protect the company he created.
Michael gave 15 years of his life to Impact Makers. He is a true changemaker, motivated not by profit but by a vision to donate 100% of his firm’s lifetime value to charitable causes. When that donation was in jeopardy, he stepped up at great personal risk to fund this lawsuit. He put his own future on the line.
EILEEN FISHER is Right: Benefit Corps are Worth the Fight
Sometimes even I lose faith. In these dark moments, I wonder whether B Corps can save capitalism from itself. Sure, we can talk about “redefining success” and using the power of business to help solve social and environmental problems. But, are the 2,788 certified B Corp companies across the globe strong enough to change the world?
Last May, I had the honor of participating in the first-ever gathering of female CEOs of Certified B Corps across North America. The event was hosted by EILEEN FISHER, the leading women’s fashion company and B Corp since 2015. Sitting in that room, surrounded by 80 other passionate and powerful women, I felt inspired and empowered. It was astounding to hear the ideas and initiatives we brainstormed together. I believed–to paraphrase the event title– that we, as women together, could be the change.
As it always happens, once I got home, a dark cloud of reality settled in and obscured my vision. The issues facing our country feel relentless: political upheaval, corruption in business, climate change, inequality, and discrimination. Is this our new normal? Honestly, for the last several months, I’ve retreated into a shell of cynicism that made me unhappy.
Yes, it’s hard to keep the faith that any of this will matter. But I still believe the fight is worth it.
When a Changemaker is Vindicated, We’re All Victors
Fortunately, Michael received a settlement that reversed the sale of IM shares and restored the integrated governance model between Impact Makers and the nonprofit IM Holdings. From the beginning, Michael’s goal was to protect IM Holdings’ ability to oversee Impact Makers and ensure the IM’s pledged gift to the community is fulfilled. We achieved that along with other key protections. This lawsuit was the first benefit enforcement proceeding in the United States and we are satisfied with the outcome of this B Corp lawsuit.
At the end of the day, and at the end of this litigation, I know where I choose to stand. I stand with Michael Pirron and with every business owner who believes that business can be a force for good in our society.
We’re not alone in this. There are changemakers are all around us, if we only have the eyes to see them. Will you stand with me?