There are some public companies that should not be public due to the absurdity of shareholder control and corporate governance - I believe Hershey is one of those companies. Today’s shakeup with the board of directors is just one more example why I feel that way but the other reasons started a long time ago.

On July 25, 2002, Hershey put itself up for sale and immediately, the little town in Pennsylvania began its protectionist claims that the American iconic brand would suddenly be put into the hands of a European company. Of course, there was no evidence that any sale would have led to their paranoid fears, but they certainly worked well enough to encourage the Attorney General of Pennsylvania to file a motion to block it.

The decision to sell Hershey’s came from its largest shareholder, the Hershey Trust Company, a charity that controls the chocolate maker and was established by Milton and Catherine Hershey to look after the community’s poorest children long after they had gone. Union workers were not one of the “community’s poorest children” when Milton set up the trust as the union did not exist that long ago. Yet, they behaved as if Milton owed them something. One member of the Bakery, Confectionery, Tobacco Workers, and Grain Millers International Union - Local 464 said about the potential sale in 2002 - ‘’We were shocked. We always thought the trust would keep Hershey Foods forever. It’s always been a Hershey town.'’ Interesting sentiment but that sense of irrational entitlement should not trump the property rights of stock ownership. Besides, there was no proof that a change in control would cost union jobs. Of course, it’s a reasonable assumption, but it’s not always the case. And one more thing, if each Hershey employee was so critical to the success of the company then they should have assumed it would be impossible for a new owner to survive without them.

One of the stupidest reasons for blocking a sale was that the town was named after Hershey and that the streets had sentimentally-sweet names like Chocolate and Cocoa Avenues. Somehow even the kiss-shaped lampposts were brought up to show how important it was to keep the city and company together. Remember there was no proof that the city would be renamed, streets would be un-chocofied, or lampposts would be replaced by new owners.

Many townspeople seemed to believe that the trust’s sole purpose was to provide philanthropy to its citizens and suggested that Milton was rolling over in his grave with the idea of a sale. That’s always a great tactic - bring up the memories of a dead saint who cannot speak for himself. The reality is that the sole mandate of the trust is to preserve the Milton Hershey School which opened in 1909 for 4 orphaned white boys. Now it serves over 1,700 kids of all races and both sexes. I doubt it’s what Milton would have expected but it’s a great school nonetheless, and I won’t suggest his bones are rotating in his casket because things are different now. The fact is that during his lifetime, Milton Hershey understood about building companies and selling them. He was a businessman and philanthropist - not just a philanthropist and while the city has been fortunate to get donations for public facilities from the company, they are not required.

Local and state politicians lacked so much confidence that Hershey’s would remain in the area that they whined about the effects on the community. Seems to me that this company has done a lot for its community and maybe too much. Maybe its not a good idea for owners to give so much to a community that they take it for granted or treat the company like the community owns it.

In my opinion, if you are a shareholder of HSY (class A) shares - you have less ownership control than a member of the community who holds no shares. You have less ownership control than the employees (union and non-union). You have less ownership control than the politicians who pander for votes by blocking corporate decisions. You certainly have less ownership control than the Hershey Trust.

As I have mentioned before, I don’t like stocks that have control issues due to multiple classes of stock. I am not saying they shouldn’t exist, I just don’t like them. The idea that a HSY investor in 2002 missed out on selling the company for $12.5 billion because of all these other control parties - politicians, workers, community, etc. is stupid. Wrigley’s bid 5 years ago was $89 a share(pre-split) - 42 % cash and 58 % stock with assurances that jobs in Hershey, PA would not be cut and that the new company would continue to support the community. That was not good enough. Cadbury’s offered about 20% less than that and also had unacceptable community concessions. So I find it interesting that the Trust and the board are talking with Cadbury’s now. Better timing? Better deal? Does it matter?

The Trust has every right to do whatever it wants with its 78% control - so do the politicians, employees and community with the control they have over the Trust. As for class A shareholders - you really don’t have much control over anything other than buying or selling the stock. What’s in your best financial interest has more to do with the others.

While the board of Hershey’s continues to worry about the Trust and the Trust continues to worry about control and the politicians, citizens and employees continue to worry about pressuring the Trust - the company is struggling. Operations and marketing seem to be a secondary concern at Hershey’s and that’s bad for everyone - even for the lowly HSY (class A) shareholders. I wonder how many charitable donations to the community have been sacrificed in the past 5 years because of their business troubles. I wonder how many jobs were lost or put at risk. I wonder how many children had less educational opportunities at the school.

I am hopeful that the new Board does a better job. Obviously, it’s encouraging to see Charles Davis and Edward Kelly involved. Hopefully, they’ll work some private equity magic. Here’s an idea - have the politicians buy it for $12.5 billion with the help of Pennsylvania taxpayers, employees and Hershey residents. Then they can do whatever they want with their socialist enterprise and ordinary investors can just say “Kiss Off!”