Family
Business Magazine E-Newsletter
May
1, 2007
Contents
1.
Investors withhold 42% of votes for N.Y. Times directors.
2.
Business Week: Mittals are
'most powerful father-son duo.'
3.
Fortune: Ford heirs seek
investment advice.
4.
Leadership issues in sibling- and cousin-owned companies.
5.
Why non-family executives leave family enterprises.
1. Investors withhold 42% of votes
for N.Y. Times directors. New York Times Co. shareholders
withheld 42% of their votes for four directors at the company's annual
meeting April 24. "While the vote is largely symbolic since the
Sulzberger family remains in control of the company, the significant
withhold vote reflects growing impatience among investors about the
company's lagging stock price," the Associated Press reported. "The
size of the withhold vote was even larger than last year, when 30
percent of investors withheld their votes for directors elected by
holders of the company's publicly traded shares." In a statement, Times
chairman Arthur Sulzberger Jr. said, "Management and the full Board
will continue to listen carefully to the issues raised by our
shareholders. That said, the Ochs-Sulzberger family remains firmly and
unanimously committed to the dual class share structure that has been
in place since before the Company went public in 1969. With
approximately 19% of the Company's Class A shares and 89% of its Class
B shares, our family's interests are very much aligned with other
shareholders in seeing the Company's performance improve." Before the
vote, Institutional Shareholder Services, a shareholder advisory firm,
had recommended that Times investors withhold their votes for the four
directors elected by Class A shareholders. In a Wall Street Journal opinion piece
the day before the vote, Donald E. Graham, chairman and CEO of the
family-controlled Washington Post Co. -- which has a similar stock
structure -- decried ISS's recommendation. "[I]f the stock structure
were eliminated," Graham wrote, "a line of buyers eager to purchase the
company would form within minutes.... The line would include private
equity firms, high-ego billionaires, international media companies
lacking a famous property and lots more. Who would bid the highest?
Perhaps a principled owner, dedicated to the welfare of the Times and the Boston Globe; willing to anger its
friends on a regular basis, as good newspapers do; and prepared to
spend money and run other risks to sustain the paper like the
Sulzbergers. Or maybe the bidder would be someone quite
different." (Sources: Associated Press, April 24, 2007; Wall Street Journal, April 23,
2007.)
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to the top.
2. Business
Week: Mittals are 'most powerful father-son duo.'
Lakshmi N. Mittal, founder and chief executive of Luxembourg-based
steel giant Arcelor Mittal, and his 31-year-old son, CFO Aditya Mittal,
are "the most powerful father-son duo on the global business stage,"
according to a recent profile in Business
Week. The Mittals, whose 45% stake in the company is worth $33
billion, have "helped revive a flagging industry," the article said.
"Aditya's dealmaking is helping turn his father's vision into a reality
as the pair play a key role in rehabilitating the steel business...."
Lakshmi's confidence in his son is key to their success, the report
noted. "The two have an easy rapport, often finishing each other's
sentences." Aditya told Business
Week, "There are very few things that we don't talk to each
other about." (Source: Business
Week, April 16, 2007.)
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to the top.
3. Fortune:
Ford heirs seek investment advice. The Ford
family's Class B stock in Ford Motor Co. is worth less than half of the
$1.14 billion it was valued at in 2001, and dividend payouts that in
2005 were more than $28 million annually have been eliminated this
year, noted a recent report in Fortune.
"Some of the heirs are concerned about their stake, and they've begun
talking with investment banks about their financial options," the
article said. "The move to seek outside investment advice raises some
questions," including whether family members will sell some of their
stake in the company. "Will the family, which has controlled the
automaker for its entire 103-year history, continue to hold enough
special class B stock to maintain its 40% control of the company's
shareholder votes?" The stock price could suffer further if the family
sold a significant amount of its stake, Fortune noted. "[W]ill Bill Ford,
who now serves as executive chairman of the board after resigning as
CEO in September, have to choose between his corporate duties and his
kin?" (Source: Fortune,
April 16, 2007.)
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to the top.
4. Leadership issues in sibling- and
cousin-owned companies. "With the numbers of sibling- and
cousin-owned companies on the rise, more and more business families are
having to confront authority issues that are vital to the process of
any work group," writes family business consultant Ivan Lansberg in The Family Business Leadership Handbook.
"Unfortunately, I have seen quite a few family councils and boards bog
down because the members consistently refuse to grant sufficient
authority to the siblings and cousins who must perform the work." The
problem is rooted in "primal struggles over dominance and submission
that are central to every child's experience," Lansberg points out.
"Siblings and cousins often view authority as if it were a scarce
resource: If one of them is 'authorized' to act on the others' behalf,
there won't be enough left for the rest..... Conceding authority to
leaders within the same generation ... is experienced as a violation of
the natural order of things. And yet this is precisely what the work of
governance requires."
For advice on
improving leadership skills and developing leaders in your family and
business, see The Family Business
Leadership Handbook. Learn more about the book and view the
table of contents here.
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to the top.
5. Why non-family executives leave
family enterprises. Non-family executives are a family
firm's "unsung heroes," write family business advisers Sam Davis, Linda
Mack and Denise Pare-Julien in the current issue of Family Business Magazine. "Because
these 'unsung heroes' are often taken for granted," they write, "family
enterprises would benefit from understanding the issues non-family
executives face." The authors list some reasons why key non-family
employees defect from family-owned companies. Among them: "When the
trust relationship is broken between the non-family executive and
senior family executives, the non-family member is likely to seek an
exit. Contributing factors include being sandwiched between family
management and family shareholders and situations in which the
non-family executive's hands are tied by family control and family
dynamics. Other factors that cause non-family executives to leave
family enterprises are a lack of authority commensurate with management
responsibilities, unrealistic expectations of their ability to clean up
management or family dysfunction, and a lack of appreciation by family
members."
To read the
whole article, see "Family companies' unsung heroes," by
Sam Davis, Linda C. Mack and Denise Pare-Julien in the Spring 2007
issue of Family Business Magazine. Visit our website
for subscription information.
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