Why publicly listed family businesses are different – and need representation

Matt Hamel first began to realise that publicly listed family businesses were different to privately held businesses when he attended a course at Kellogg School of Management.

He’d just joined Brown-Forman – the family-controlled drinks group, famous for Jack Daniel’s, and listed on the New York Stock Exchange – as the company’s general counsel. “The CEO sent me off to learn more about family businesses at Kellogg,” he says. “The course was excellent, but it was mainly geared to private companies, there was very little content around publicly listed businesses that were family controlled. I had a sinking feeling of loneliness in this respect.”  

But after some research, Hamel found more than 130 listed family businesses in the US. He then got in touch with many of their general counsels and started realising that, like him, many of them felt alone when it came to the unique set of issues they were having to deal with. “So, we were all very happy to find a network of like-minded people to bounce ideas off each other,” says Hamel.

After realising the need for networking and support among this group of like-minded people, Hamel set up the group of general counsel and other senior governance professionals at publicly listed family-controlled companies in 2010. The group has so far attracted more than 80 members from 60 companies. They meet twice a year and discuss a wide-range of topics on the issues facing listed family businesses. These issues, says Hamel, involve all the regular corporate governance pressures a listed business has to deal with, like regulatory filings and quarterly board meetings. “But lay on top of that the interaction between the family and the company, the employment of family members, and the impact of laws that may make sense for most companies but don’t for family-controlled companies,” he says.

Sometimes the issues can get quite complicated, as Hamel explains. “Companies these days often face pressure to take a stand on politically combustible issues, which is difficult enough, but a controlling shareholder or family might also have a particular agenda they want the company to pursue.”

Members of the group include some big corporate names like Ford, Marriott International, Hyatt Hotels, Estée Lauder, and The New York Times Company. But also smaller listed businesses like Seneca Foods Corporation and QuadGraphics. Although there are no size limitations, membership was initially limited to listed businesses where the family controlled at least 50% of the voting shares. This has since been relaxed to broaden the membership to groups like Ford and Marriott, where the family exercise effective control with less than a majority of the votes.

Topics discussed at some of the recent meetings include: “Who decides on a company’s strategy? CEO v. board v. shareholders” and “Shareholder Activism and the PLFC”. Although the meetings mostly involve lawyers from the member companies, C-suite managers and independent directors often attend, and guest speakers from academia have given presentations. Members of controlling families also attend, says Hamel.

Hamel says the group is very informal – there are no dues for members, “They just have to get themselves to the meetings,” says Hamel. But the group is growing, and a similar forum has been launched in Canada after being inspired by Hamel’s initiative.

“I’m happy to see the group grow to a natural level driven by the energy of the members behind it,” he says. Given the likelihood that more family businesses will list in the years ahead, the PLFC group should have plenty of energy to drive it forth in the years ahead.