Hershey Can't Be Sold Without an Orphan School's Permission. That's by Design.
In 1918 Milton Hershey gave away his entire company - 5,000 shares worth $60 million - to a trust for an orphan school. A century later that trust holds ~80% of the voting power and has already killed a $12.5 billion takeover.
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On November 13, 1918, the richest candy maker in America quietly signed away everything he had built. Milton Hershey handed over all 5,000 shares of Hershey Chocolate Company — the entire amount the company had ever issued, worth about $60 million — to a trust for a small school he had founded for orphan boys.2 He kept nothing. No retained block, no heirs' stake, no golden share for himself. And he didn't announce it. The world found out almost by accident, when The New York Times broke the story five years later, in 1923.2 A century on, that act of giving everything away is the reason Hershey is one of the only companies in the S&P 500 that cannot be sold without the permission of an orphan school's lawyers.
The official story is that Hershey is a public company like any other - shares trade, a board governs, anyone with enough money can make a bid. Strike that. Hershey trades on the New York Stock Exchange, but it is not for sale to the highest bidder. The highest bidder has already shown up - twice - and been turned away by the unlikeliest gatekeeper in American finance: a charitable trust answerable not to shareholders but to the Pennsylvania Attorney General.
A minority of the money, a supermajority of the votes
Here is the mechanism, and it turns on one detail almost everyone misses. The Milton Hershey School Trust does not own most of the company - its economic stake is a minority interest. What it owns is most of the votes. Hershey has two classes of stock: ordinary common shares that get one vote each, and Class B shares that get ten.3 The Class B shares don't trade publicly; they sit, in bulk, inside the Trust. So a minority of the economics buys a supermajority of the control. After the Trust sold 4.5 million common shares in 2025 to diversify its portfolio, it still held over 60 million Class B shares - and more than 80% of the total shareholder voting power.8 That is the wedge: sell the cash-flow exposure, keep the throne.
| Class B (held by the Trust) | Common (public market) | |
|---|---|---|
| Votes per share | 10 | 1 |
| Publicly traded | No | Yes |
| Convertible to common | One-for-one | — |
| Who holds it | Hershey Trust Company, for the school | Public investors |
And the structure is belt-and-suspenders. It isn't just that the Trust happens to hold enough votes today; the company's own charter forbids the board from doing anything that would let the Trust lose control. The Hershey Trust Company's approval is required before the board may authorize any issuance of common stock - or take any other action that would dilute the Trust's voting control - and that requirement is written directly into the company's stock description filed with the SEC.7 You cannot vote your way around the Trust, and the board cannot print its way around it either. Three Trust representatives sit on the board to make sure of it.3
The day the school tried to sell, and the state said no
The popular memory of 2002 is a grassroots fairy tale: townsfolk rose up, and a heartless sale was beaten back. The legal reality is more interesting and more instructive. The Trust's own board started the sale process. In July 2002, an SEC filing confirmed the Trust controlled 77% of Hershey Foods' voting power and had directed the company to explore a full sale - to diversify a fortune dangerously concentrated in a single chocolate stock. Management initially resisted and floated a stock buyback instead; the Trust rejected it.4 A $12.5 billion offer arrived from Wrigley, and a competing joint bid from Nestlé and Cadbury Schweppes was also on the table.6 This was not a phantom deal. It was a real auction, run by the controlling owner.
Then the part no ordinary takeover has to reckon with. Because the seller was a charitable trust, its decisions are policed by the state. The Pennsylvania Attorney General intervened through the Dauphin County Orphans' Court - the statutory oversight body for charitable trusts - and that pressure, not the bake sales, is what turned the board around. In September, a second filing confirmed the Trust's board had voted to terminate the sale.5 The aftershock was brutal: ten of the Trust's seventeen board members were forced to resign, and the Trust later changed its bylaws to make voting for any future sale even harder.6 The deal didn't die in the market. It died in an orphans' court.
But isn't the deed sacred and unbreakable?
The romantic objection is that none of this is a quirk of stock classes - it's Milton Hershey's iron will, an immutable founder's deed that nothing on earth can amend, and a flat prohibition on ever selling the company. It is a lovely story and it is mostly wrong. The deed has been modified repeatedly: during Hershey's own lifetime in 1933, and through a full, court-approved Second Restated Deed in 1976.9 A 1998 Pennsylvania law later handed the board power to redefine what counts as spendable 'income' without going back to court at all.9 And the deed never actually banned a sale - the Trust's own board argued, correctly, that Hershey did not stipulate the company must never be sold, and that he himself had weighed selling it more than once. The corpus rules govern how the trust's money is used, not whether the underlying company can change hands.
So the real lock is not a dead man's wish carved in stone. It is something more durable than that: a living governance structure where the controlling vote is held by a fiduciary that must answer to a state regulator. A normal controlling shareholder can be bought out at the right price. A charitable trust's trustees can be sued by an attorney general for breaching their duty to the beneficiaries - and in 2002, effectively, they were. That is why a price tag alone can't move Hershey. The deciding question isn't 'is the offer good for shareholders?' It's 'is the sale defensible to the orphans' court?' Those are not the same question, and the second one has no market price.
The instinct is to assume whoever owns the most of a company controls it. Hershey is the clean counterexample: the Trust owns a minority of the economics and a supermajority of the votes, because control was engineered through share classes and charter clauses, not bought through ownership. The deeper lesson is about WHO holds that control. A founder who keeps control for himself can always be tempted out by a big enough check. A founder who hands control to a charitable trust answerable to the state builds a lock that even his own successors can't pick - because the gatekeeper's legal duty runs not to the share price but to a school full of children. If you want a company that survives its founder's death intact, don't write a stronger will. Give the votes to someone whose fiduciary duty makes selling out a breach of trust.
Milton Hershey's genius was never the chocolate. Plenty of people could make a sweeter bar - and his own successors once decided a $12.5 billion check was worth more than independence. His genius was the structure he left behind: he gave the whole thing away to children, wired the votes so that no future board could quietly sell it, and left the keys with a fiduciary whose first duty is to a school, not a stock price. Most founders try to control a company forever and fail the moment they die. Hershey controlled it forever by refusing to own it at all. The candy is the product. The deadlock is the legacy.
When a founder's design outlives the founder
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Sources
Where this comes from — the filings, records, and reporting behind it.
- 1The Deed of Trust was executed by Milton S. Hershey and Catherine S. Hershey on November 15, 1909, establishing the Hershey Industrial School (now Milton Hershey School), with Hershey Trust Company as trustee.
- 2On November 13, 1918, Milton Hershey donated 5,000 shares of Hershey Chocolate Company common stock — the entire amount originally issued — valued at $60 million, to the Hershey Trust as trustee for the Hershey Industrial School. He did not publicize the gift; news broke publicly in the New York Times on November 9, 1923.
- 3Class B Common Stock carries 10 votes per share versus 1 vote per share for Common Stock; Class B is not publicly traded but is convertible to Common Stock on a share-for-share basis; Hershey Trust Company, as trustee for the sole benefit of Milton Hershey School, 'maintains voting control over The Hershey Company'; three Trust representatives serve on the Board.
- 4On July 25, 2002, an SEC 8-K confirmed the Milton Hershey School Trust 'controls 77% of the voting power of Hershey Foods' stock' and had directed the company to explore a full sale to diversify the Trust's holdings. Hershey Foods management had initially opposed the sale and offered a stock-repurchase alternative, which the Trust rejected.
- 5On September 18, 2002, a second Hershey Foods 8-K confirmed the Trust's board voted to instruct the company to terminate the sale process; the company simultaneously stated its board had not been approached about repurchasing stock from the Trust and had no intention of renewing that proposal.
- 6Following the 2002 sale reversal, the Pennsylvania Attorney General intervened via the Dauphin County Orphans' Court; 10 of the Trust's 17 board members were forced to resign; the Wrigley offer stood at $12.5 billion; a competing Nestlé/Cadbury Schweppes joint bid was also rejected. The Trust later changed its bylaws making it harder to vote for a future sale.
- 7The Hershey Trust Company's approval is required before the Board may authorize any issuance of Common Stock or take any other action that would cause the Trust to lose voting control — this is codified directly in the company's certificate of incorporation / stock description filed with the SEC.
- 8In March 2025, the Trust sold 4.5 million common shares (4.05M to Morgan Stanley, 450K to Hershey itself) for portfolio diversification while retaining over 60 million Class B shares; post-sale the Trust still holds over 80% of total shareholder voting power.
- 9The Deed of Trust has been substantively modified multiple times — including during Milton Hershey's lifetime (1933) and via court-approved amendments through 1976 — undermining the popular claim that it is immutable. The ProPublica/Inquirer/Spotlight PA investigation also documented that Pennsylvania's 1998 law gave the board authority to redefine 'income' for spending purposes without court approval.