Family
Business Magazine E-Newsletter
May
20, 2008
Contents
1.
Kerkorian to increase his stake in Ford.
2.
Former CFO of Hunt family's investment company sues two heirs.
3.
Hong Kong firm faces family feud at pivotal time.
4.
Cindy McCain is chairman of her family business.
5.
Now available: The Family Business
Shareholder's Handbook.
6.
Preview of Family Business Magazine's
Summer 2008 issue.
1. Kerkorian to increase his stake in
Ford. Kirk Kerkorian's Tracinda investment company plans
to increase its stake in Ford Motor from 4.7% to 5.6%, Forbes.com
reported. Kevin Tynan, an auto analyst at Argus Research, told Forbes that "There has to be more
to it than a purely passive play." Forbes
speculated that Kerkorian might be aiming "to gain enough influence at
Ford to eventually get rid of the Class B shares, which gives the Ford
family 40% voting control despite owning just 4% of the company's
stock." (At Ford's annual meeting earlier this month, which Kerkorian
did not attend, a proposal to consider a recapitalization plan to
provide that all stockholders have one vote per share was defeated by a
margin of about 73% to about 27%.) Auto industry writer Paul Ingrassia,
in an article on the Wall Street
Journal's Opinion page, noted that "last year's sale of Dow
Jones ... despite the Bancroft family's 62% voting control, proves that
super-voting shares aren't a surefire defense." However, Ingrassia
wrote, "there's a big difference between that sale and what's happened
at Ford. Rupert Murdoch offered to buy all of Dow Jones at a 60%
premium to the company's stock price. Mr. Kerkorian has offered a much
smaller price premium for a far smaller stake in Ford. While Mr.
Kerkorian can be unpredictable, had he wanted control of Ford, he would
have had to make his own offer for much more stock at a substantially
higher price." (Sources: Forbes.com, April 28, 2008; Wall Street Journal, May 1, 2008.)
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2. Former CFO of Hunt family's
investment company sues two heirs. Miro Vranac Jr., a
trustee of a $170 million Hunt family trust, is suing two of its
beneficiaries, Mary and Albert Huddleston, accusing them of misusing
more than $6 million in trust fund money and firing him without cause
from the company that manages the trust, the Dallas Business Journal reported.
Mary Huddleston is the granddaughter of oil baron H.L. Hunt. "The suit
alleges that Mary Huddleston asked trustees for $6 million to pay off
mortgages for properties she owns," the article said. "And when she
received it, she instead used the money for other unspecified purposes,
according to the litigation." The suit refers to "misguided projects in
Iraq and Vietnam" and "a sizable settlement of a dispute in Vietnam
arising from one of Albert's personal transgressions involving a female
citizen of Vietnam," according to the Dallas
Business Journal report. Vranac, who according to the suit has
been a trustee for the trust since August 1995, "is also seeking $2.6
million in deferred compensation for his role as chief financial
officer for Legacy Investments, the company set up to invest the ...
trust's funds, and an injunction that will allow him to continue to
work as a trustee without interference from the defendants," the
article said. "Vranac claims in his suit that he was fired as CFO in an
effort by the Huddlestons to pressure him to leave as trustee, which is
an unpaid position." (Source: Dallas
Business Journal, May 2, 2008.)
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3. Hong Kong firm faces family feud
at pivotal time. Sun Hung Kai Properties Ltd., a giant
family-controlled Hong Kong real estate developer, is experiencing
family tensions as it has outgrown the Hong Kong market and is
embarking on major projects in mainland China, where competition is
high, the Wall Street Journal
reported. On May 15, chairman and CEO Walter Krok, 58, won a temporary
injunction preventing his two younger brothers, vice chairmen Raymond
and Thomas, from making him non-executive chairman and appointing their
octogenarian mother, Kwong Siu-hing, as chairman. Walter Krok, has been
on a leave of absence for three months. An April Journal article reported that the
reason, according to a Sun Hung Kai board member, was that "Mr. Kwok's
close relationship with a female friend was causing tension with his
brothers." Though Kwong Siu-hing does not have an official position
with the company, she is a major shareholder through a family trust and
has an influential behind-the-scenes role, the Journal reported. "For decades,
the company has maintained a reputation for unity, dependability and
quiet professionalism," the Journal
noted in an article published last week. "The three brothers were known
for their ability to work together since the death in 1990 of their
father." Walter Krok's brothers bolstered their case against him with
medical reports saying he has bipolar disorder, which he contends "were
based on misinformation his brothers gave a doctor," the article said.
In 1997, Walter Kwok was kidnapped by a Hong Kong gangster and freed
after the family paid a $77 million ransom, the April report noted. Sun
Hung Kai, with a market capitalization of about U.S. $45 billion, is
"the biggest listed real estate company in the world, according to
Thomson Financial," the Journal
reported. The family trust has a 41.51% stake in the company, the Journal said. At a recent news
conference to announce interim results -- at which the company slashed
forecasts for the size of projects it would complete this fiscal year
and next -- none of the three brothers was present, the April article
said. (Source: Wall Street
Journal, April 16, 2008 and May 16, 2008)
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4. Cindy McCain is chairman of her
family business. Cindy McCain, wife of presumptive
Republican presidential nominee John McCain, "heads one of the nation's
largest beer distributorships, an Anheuser-Busch Cos. franchise
inherited from her father," according to a recent profile in the Wall Street Journal. "She has
sported 'MS BUD' on her license plate, and from the campaign trail she
uses her BlackBerry and cellphone to ... expand her corporate empire,"
the article said. Cindy McCain inherited Hensley & Co. -- where
John McCain worked as a public relations manager after leaving the Navy
when the couple were first married -- when her father died in 2000. The
company's CEO, Bob Delgado, expected her to sell the business, but
"Mrs. McCain said she wanted the company her father built from scratch
to go to her children someday," the Journal
reported. Cindy McCain is chairman of the company; her stepson Andy
McCain is CFO. "Since James Hensley's death eight years ago, the
distributorship has nearly doubled, holding a significant portion of
the Phoenix-area market share," the Journal
reported. "It has 700 employees and annual revenue of about $300
million. Mrs. McCain has approved the buyout of another
distributorship, helping bring sales last year to 23 million cases of
beer." Though she declines to say what percentage of the company she
owns, "[i]ndustry experts estimate her stake at about $100 million,"
the article said. According to an Associated Press report, Cindy McCain
has refused to release her tax returns, saying, "[M]y husband and I
have been married 28 years and we have filed separate tax returns for
28 years." The AP reported that "A prenuptial agreement left much of
the family's assets in Cindy McCain's name." (Sources: Wall Street Journal, April 17,
2008; Associated Press, May 8, 2008.)
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5. Now available: The Family Business Shareholder's Handbook.
In order to sustain a business through multiple generations, families
must develop business and family
governance structures that ensure prudent stewardship of the company
while maintaining family harmony and family pride. This does not
automatically occur, even in families who own large and successful
companies. Case in point: In June 2007, when members of the Bancroft
family were debating whether to sell their company, Dow Jones &
Co., to Rupert Murdoch's News Corp., Bancroft family member Crawford
Hill sent a letter to his relatives lamenting that " ... there has
absolutely never existed any kind of family-wide/cross-branch culture
of teaching what it means to be an active, engaged owner and more
crucially, a family director." The just-published Family Business Shareholder's Handbook
combines advice from internationally recognized family business
advisers and real-life examples of how business families resolved
common ownership dilemmas. It offers tips and strategies on how to
develop governing bodies and shareholder education programs.
Learn more
about the book, see the table of contents and find ordering information
here.
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6. Preview of Family Business Magazine's Summer
2008 issue. The Summer issue of Family Business Magazine will be
mailed to print edition subscribers before the end of the month. The
new issue features an update of our highly acclaimed list of America's
oldest family companies -- newly revised to include companies that were
brought to our attention since our list was last published in 2003.
Also in the Summer issue: the story of family succession at Ping Golf;
Ryan O'Reilly explains why he left O'Reilly Auto Parts, the
multibillion-dollar firm founded by his great-grandfather; insights
into how the nearly 400 family owners of Laird Norton Company achieve
cohesion; a discussion of the role of the board of directors and the
family council, and more. Visit our website for subscription information.
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