Dueling Perspectives: Governance for a family in transition
The family that owns Milo B. Butler & Sons Ltd. is a legend in the Bahamas. The company’s founder, Sir Milo Boughton Butler (1906-1979), was the first Bahamian-born governor-general of the Bahamas; his picture is on the Bahamian $20 banknote. Sir Milo was also an entrepreneur who started out with a grocery in 1928 and expanded into a wide range of ventures, including livestock, ice delivery, rental properties and a nightclub.
In 1963, Sir Milo founded Milo B. Butler & Sons Ltd., which at first traded in cattle, ice, agricultural products and prepared foods. The company, incorporated in 1967, today is a Nassau-based wholesale and retail distribution business led by the third generation. The family’s holdings also include a commercial development company, plus investment interests in several local companies.
The Butlers are currently in transition. Franklyn Butler II, 35, who had led the business since the sudden death of his father, Franklyn Sr., in 2008, has ceded the CEO post to his brother Damian. Franklyn’s cousin Antoine, 41, who had chaired the family council since its establishment in 2012, has left that position to join the business as operations manager. Faith Butler, an associate professor in the School of Education at the University of the Bahamas, is the new family council chair.
Franklyn, who was only 26 at the time of his father’s passing, had to institute a governance process and manage family disagreements over share ownership and adding independent directors. More recent challenges have included buying out family members and bringing the fourth generation along. Today there are about 21 family shareholders and about 50 to 55 total family members.
As Franklyn and Antoine redefine their roles in the family and the business, they consider our question: What will be the priorities going forward?
Franklyn Butler II, Chairman and Former CEO:
“I think the priorities in the case of the business are going to be about performance measurement of the business and family members in the business. In the context of the family council, how does [Antoine] get other participants to buy in to the vision and philosophy that the family council has created for itself?
“Both transitions are creating opportunities for more engagement, and it is actually going to be the best test of whether what we’ve been doing has been successful, quite frankly.
“The other challenges are going to be: How do we get shareholder commitment to continued reinvestment in the business? How do we measure value creation for the shareholders as we move forward? What direction do the shareholders want from the business? Because now that we’ve got governance, they’ve got to communicate that.
“When you’re in crisis, there’s a leader who kind of just drives the process. [Through] most of my tenure, I pretty much drove the agenda with very little [family] participation, I would say. And now the family’s got to speak to what business it wants to be in, what does performance look like for them, how do we deal with short term vs. long term, how do we deal with debt? We’ve been pretty much risk-averse. How much risk do we want to take on?
“We bought some people out, I guess, three or four years ago. And now we’ve got to buy out additional shareholders, and the question is, do you do that from cash flow, or will you take on debt to release some of these shareholders? Do we buy 25% of your interest up front and then pay you the rest over 10 years? Those are going to be the kind of financial exercises that we’re going to be going through. When I started, we just bought people out outright, because we were trying to get naysayers to kind of go in peace. But now I think the business is certainly more in control of its own destiny — because we have governance.”
Antoine Butler, Operations Manager and Former Family Council Chair:
“We have family members who want to sell their shares, so we’ve been trying to accommodate those family members. It’s really about giving family members the information when they ask, in reference to the financial status of the company: Is the company in the position to buy out their shares?
“Before [the family council], we just basically had — and we still have it, to a certain extent — an open-door policy. You [could] come to the company offices and just walk to [the CEO’s] office and talk with him. In a way, the family chair and the [council] have become a buffer for helping to prevent some of that. So that the CEO can continue to focus on what is important, which is keeping the doors of the company open.
“There’s still a lot of education that’s needed. But it has gotten a lot better. A lot of people would come to me and ask what’s happening, and I would then be able to give them an idea why certain things were being done in the manner that they were.
“And [family members] even make suggestions: Why don’t we do this? And so then we have more things to put on our agenda, at our next committee meeting or at our next assembly. A prime example that has been suggested is another family reunion.
“Right now, one of the major issues that we have is work being done to our facilities. So family members are wanting to know why we are investing more into capex [capital expenditure] projects as compared to paying dividends. Once it’s explained to them, then I think it’s a lot easier for them to understand the sacrifice we’re making at this point in time. We’re trying to improve the facility so that we can accommodate being able to make more money and pay out more dividends in the future.”
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