Faith, family and fair governance

By Margaret Steen

A. Duda & Sons started out 90 years ago growing celery. Now in the fourth generation of family leadership, the company is a diversified enterprise (though it still grows celery) guided with the help of a board of directors and a family council.

When Slovakian immigrant Andrew Duda and his three sons, John, Andrew Jr. and Ferdinand, planted their celery in Central Florida in 1926, they also planted seeds that would enable a successful family enterprise to take root: a pattern of continuing diversification, with a strong faith as a foundation.

Today, A. Duda & Sons has 600 employees and holdings in 19 states. Andrew Duda's great-grandson David Duda is the CEO, and 25 other family members from the third, fourth and fifth generations work in the company, which generated $441 million in gross revenues in 2014.

The business has come a long way from the planting of that first celery crop. The founding of the company was not a grand occasion, according to David Duda. "That just happened to be the first time they didn't go out of business after harvesting their crop in the spring."

Andrew Duda's three sons, known to family members today as the "Three Seniors," expanded both the company's geographic range and its lines of business, raising cattle and growing citrus, sugar cane and sod. The third generation of owners moved into California, Texas and Arizona.

And more than 25 years ago, the company branched out into real estate development, creating a master planned community called Viera in Brevard County. As part of that development, the family built a golf course; ten years ago, they started a homebuilding division.

More recently, the family has begun using a commercial real estate portfolio to smooth out the peaks and valleys in earnings.

"The family voiced a desire for more predictable earnings, which is really hard in agriculture," says Jennifer Pendergast, senior consultant with the Family Business Consulting Group, who has worked with the Duda family for more than a decade. "You can't predict the price retail buyers are going to pay you for celery, and you also can't predict what the weather is going to be like."

A. Duda & Sons Inc., headquartered in Oviedo, Fla., is the parent company, with several operating subsidiaries. For example, Duda Farm Fresh Foods grows produce, and the Viera Co. is involved in real estate development in Florida.

Strong family ties

Susan Hanas, daughter of Ferdinand Duda, is the chairman of the board. Hanas, 65, pursued a career in education instead of working directly for the family business and is now superintendent of a Lutheran school. Her husband worked for the company for 43 years.

Hanas grew up at the end of the era when girls were expected to limit their career choices to teaching, nursing or secretarial work. Although girls in the family weren't discouraged from participating in the business, "we weren't really encouraged to do it either, because we were an agricultural business," she says.

Even though she didn't work there, Hanas says, "The business was a big presence in my life." Her father, Ferdinand, was in charge of the agricultural side of the business. She saw him primarily late in the evenings and on Saturdays and Sundays, which were reserved for church and family. The business and family blended seamlessly together. Her uncles lived on the same street. "It was not unusual for my dad to go to one of [his brothers'] homes or for one of them to come to our house, and they'd talk business," she says. "The company was just part of our lives."

Fourth-generation member David Duda was named CEO in 2010. Although he says he always expected to work for the family business, he did not take the usual route. The company had not typically had a lot of white-collar job openings.

"I took a different path," Duda says. "I was always interested in finance and accounting and the stock market." He got an economics degree, then became the first family member to get an MBA. And then he came to a conclusion that was even more unusual for his family: He decided to work outside the family business for a time.

His reasoning, Duda recalls, was simple. "If I want to learn how to grow celery, there's no better place [than the family company]. But if I want to learn accounting, I need to go somewhere else." So he got a job in banking for three years, then returned to the family business, hoping that someday he could become the chief financial officer. He rotated through positions in information technology, purchasing and the controller's office. Finally, at age 40, he became CFO.

Seven years later, Duda was asked to become chief administrative officer, supervising departments including food safety, IT, purchasing, communications, human resources and legal. "It certainly gave me a much broader view of all the support services it takes to make the company successful," he says.

When it came time to choose a new CEO in 2009, the situation was complicated by the large number of family members actively involved in the business, as well as the fact that most of them had experience on the agriculture side of the business while the real estate business was growing, Pendergast says. Family members said their preference was for a family member to become the next CEO, but they also wanted to be sure the person would be qualified to continue the company's expansion.

The result was a process in which everyone in the business was invited to apply, and external candidates were considered as well.

"Along the way, we were very careful about updating the family on what was happening," Pendergast says. The result was that when David Duda was chosen, he "went in with the credibility he needed, and he has done a phenomenal job."

Duda took the reins when the business was going through the recession, and he had to continue implementing changes that had been put in place to help the company recover.

"There was a lot to figure out," Duda says. "The company had to make changes in order to be stronger. We curtailed some lines of business and completely exited others to improve the business and position it for when the recovery came."

Innovations in governance

As the business has evolved, so has its governance.

The business has about 100 owners, with no single shareholder owning more than about 8% of the stock, says Stacy Mello, 42, a member of the fourth generation. She is senior director of planning and communication and also chairman of the Duda Family Council. In the company's earlier days, most households in the family had someone employed in the business. Today, most don't.

"That creates a situation where we have to collect our thoughts and desires and expectations for the business and share those with one voice instead of 100 different voices," Mello says. "That's been a big thing we've been working on as a council and as a family." Last year, the family council created its first "Collective Voice" document, which lays out the family's expectations for itself, the business and the family's ownership expectations to share with the board of directors.

The first family council was elected in 2004, according to Mello. She has served on the council since its inception and has been chair for the past three years.

The family needed new processes and structures, given its growth since the days when the business consisted of a father and his three sons, all of whom lived on the same street and attended the same church and school. "We have 100 different households today," Mello says. "We're a much larger group, and we didn't grow up on the same street."

The family council now works to keep the family members connected to each other and to the business. "Those are things that in the past just happened," Mello says. "Today we have to be much more deliberate in how we connect folks to each other, to our business and to our legacy."

The family meets twice each year, once at an annual shareholder meeting and once for a family meeting that is geared more toward education and fun.

The family council was formed at a time when "there were family members totally involved in the business and family members totally not involved in the business," says board chairman Susan Hanas, who chaired the family council for its first ten years. "How were we going to manage that moving forward?"

During Hanas's time on the family council, the group worked on documents such as the mission, vision and values statement; a family employment policy; and a reimbursement policy for those who attend family events.

The board of directors, which consists of six family members (two from each branch) and four independent directors, relies upon the Duda family council to help it understand the family. The council conducts surveys and gathers other feedback to identify the family members' concerns and priorities. The company is currently searching for new independent directors for its board because some are reaching the end of their terms.

The independent directors give the board "an external view" of the company. They also serve as the compensation committee and the audit committee, "so that compensation is looked at objectively and doesn't become a family issue," Duda says.

Focus on faith

"The Duda family and the company story are deeply rooted in faith and family," Mello says. When Andrew Duda emigrated from Slovakia, he and his family helped found St. Luke's Lutheran Church in Slavia, Fla. "They approached their business as a business, but also as an opportunity to bless other people," Mello reflects. "That philosophy has definitely been passed on through the generations."

This was an integral part of putting together the family council and the family's mission and vision statements. The purpose of the business is "to multiply and share God's blessings," Mello says. This includes dealing with other people with integrity, and being good stewards of the family's resources.

"There have been times when we have lost money because we have honored a contract that other people might try to break," Duda says. "We care a lot about doing the right thing."

The family's faith guides its business practices, Mello says. "We don't shy away from the fact that we're a Christian company." However, the company does not make hiring decisions or take political stands, for example, based on the owners' faith. "It's not about pushing our faith on someone else," Mello explains. "We try to live our faith. We quietly go about being a faith-based company and using those principles in how we operate our business and how we treat people."

The company donates 10% of its net income, with three-quarters of that going to three foundations, one for each branch of the family. The remainder is donated by the business itself.

The Duda family is well known and well respected among owners of large land businesses in Florida, Pendergast says. "People tend to look at them as a role model on the governance front" because the business is owned by a large family and still runs smoothly, and also because the company's board has included independent directors for several decades.

With strong governance and the grounding in faith, the Duda family hopes the business can continue to thrive—and to diversify.

Duda says the company is expanding its plantings of juice oranges, as well as its homebuilding business. And it is going back to its roots to find new growth potential for the celery business: selling pre-cut celery, not just whole stalks, to food service companies and grocery stores. "Those are three areas we see as having a lot of growth potential," he says.

The company owns a lot of agricultural land, particularly in some of the less developed areas of Florida, which holds potential for the future, Pendergast says. To continue diversifying the business as the family continues to grow will require an ongoing communication effort, she adds. "When you have a shareholder base that big, it's really important that you get buy-in," she says. Some diversification efforts can take time to pay off, and it's important that shareholders understand that.

This work "will be ongoing, but a lot of the groundwork has already been done," Pendergast says.

As the family celebrates the company's 90th anniversary, they are looking back to its founders as well as forward.

"A lot of times we focus on how hard they worked at putting their business together, but I always like to remind people, too, that they were visionary people," Mello says. "I always marvel at their vision. They really had a vision for a growing business."

Margaret Steen is a freelance writer based in Los Altos, Calif.

Copyright 2016 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

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