Apr 20, 2015
Investing in People Through Profit Sharing
As one of the newer members of MailChimp’s senior leadership team (I’ve been here 17 months), I’ve been amazed at the company’s generosity from day one. I’ve worked for much bigger companies—some like Microsoft, whose benefits and compensation are legendary. Yet none of them compared to MailChimp—in dollar value, career fulfillment, or pride of ownership and contribution. As the Chief Operating Officer, I believe that investing in people is key to our success.
There are lots of ways we invest in our employees. We invest in their education through tuition reimbursement, internships and apprenticeships, and MailChimp University, a company-wide program with professors from Emory University’s Goizueta Business School. We invest in our people by focusing on MailChimp’s culture—we’ve recently expanded our senior leadership team to include a Chief Culture Officer, Marti Wolf. As our former HR director, Marti and her team have worked hard to make MailChimp a wonderful place to be every day.
MailChimp has never really advertised the financial benefits we offer, but sometimes, it’s hard not to wanna talk about it. So…I’m talking about it, because it’s really incredible. Knowing that this is literally our co-founders’ (Ben and Dan) money, and that they share it so generously, is remarkable.
One of my favorite MailChimp moments so far was when Ben (our Chief Executive Officer), Dan (Chief Customer Officer), Jenny (Chief Financial Officer), and I were going over year-to-date revenue and profits in early December. The numbers looked good, and later that day, Ben came to Jenny and me and said, “Dan and I need the two of you to figure out how to distribute $2.5 million in bonuses this month.”
WOW. What a great problem to solve.
Tom’s note below meant a lot to us—so much that I felt I had to share it with everyone. While we don’t offer the traditional stock options that some startups and public companies do, our employees share in MailChimp’s success on every level. As a profitable, privately held company, we have the flexibility to structure our profit sharing any way we want. This approach makes sense for our business, and it shows our employees how valued they are. Our employees get to share in the success of MailChimp as we go, and that feels good.

Tom’s referring to our ridonkulous profit sharing plan that puts a bonus of up to 19% of your annual salary into everyone’s 401k plan each year, based on company performance. That’s in addition to a 6% company match for 401k. For example, if you made $75k last year, MailChimp matched your 401k contributions up to 6% ($4,500) +19% profit sharing ($14,250) for a total employer contribution of $18,750. IN ONE YEAR. All immediately 100% vested. Ask your dad, that’s good shit. Since 2010, MC has matched/contributed over $12.7M to more than 350 employees’ 401k plans.
Profit sharing is one of many things we do differently around here. We’re grateful that we can invest in our employees this way, and I love working with so many talented people who invest their time and energy right back into MailChimp.
Luigi Montanez
What are the advantages of giving the bonus through a 401k plan compared to a regular cash bonus?
04.20.2015
Jenny
Luigi,
In 2014 we gave employees a 12% cash bonus along with a 19% profit sharing contribution so they had both money they can spend now and money for retirement.
04.22.2015
Jonathan
How do you deal with the fact that there is a max pre-tax contribution to 401K ($17,500 in 2014). Do you put in the 6% match pre-tax and then the bonus after tax? I’m sure the employees are thrilled to get the extra cash but it could make tax planning a bit more difficult (although admittedly a good problem to have in this case).
04.21.2015
Jenny
Jonathan,
You are correct that the max an individual can contribute to a 401k in 2014 was $17,500, but the overall max that could be contributed to a 401k in 2014 was $52,000.
For example, if a MailChimp employee made $75,000 in 2014 and contributed the max $17,500 to their 401k, then the total amount contributed would’ve been $36,250 ($17,500 + $4,500 [6% matching contribution] + $14,250 [19% profit sharing]).
As for taxes, the 6% match and 19% profit sharing contributions go directly into the 401k, so there are no tax implications until the employee decides to take the money out.
04.22.2015