From the Ground Up - McCain Foods Limited

Kathryn McCain chairs the
McCain Foundation, whose
grant recipients include the
Atlantic Veterinary College.
At the grant presentation,
in 2005, the college’s dean,
Timothy Ogilvie, holds a rare
P.E.I. blue lobster.
But the McCain family was not interested in selling.
The four brothers who had owned the company since its
inception in 1957 had eighteen offspring among them.
Should Wallace and Harrison McCain pass on the reins
to one of them? Or should a professional manager not
named McCain be hired to assume leadership of the
company?
By the latter part of the 1980s, these questions were
beginning to preoccupy Harrison and Wallace. Their two
elder brothers were gone – Bob had died in 1977, Andrew
in 1984. Wallace would turn sixty in 1990, and Harrison
was three years older. Agitated by the growing disagreement
between their uncles, the heirs of the older brothers
were beginning to push for more involvement in the
company.
During the 1980s, two members of the second generation,
Allison, son of Andrew, and Wallace’s son Michael,
rose to hold important jobs in the McCain organization.
Harrison considered Allison or perhaps one of his own
sons to be a possible future CEO, while Wallace thought
Michael was the best-equipped family member to assume
that role.
The working arrangement between the brothers as co-CEOs was, with few exceptions,
that they agreed on a course of action or they did not proceed. Unilateral
actions by each of the brothers revealed the growing disagreement between them.
In 1990, Harrison appointed Allison as managing director in the United Kingdom;
Wallace objected but acquiesced. Later that year, Wallace appointed Michael as the
CEO of U.S. operations with Harrison’s apparent agreement, which he withdrew later
that day.
At that point, the conflict, which had been simmering for several years, became
public. It triggered lawsuits, an arbitration before a senior New Brunswick judge,
more litigation in New Brunswick, an unsuccessful offer by Wallace to either buy
out other shareholders or have them buy him out, and an unsuccessful attempt by
Harrison to buy Wallace’s shares.
In 1991, as Harrison and Wallace tried to work out their differences over succession,
the governance of the company was changed. Under a plan designed by Harrison, the
family holding company, McCain Foods Group Inc. (Holdco), became an active
shareholders’ vehicle, its board populated with second-generation McCains representing
the four family groups.
Holdco gave the family members a better window on the operations of the
company and provisions to protect their position as owners, without their involvement
in the day-to-day management of the company. The board of McCain
Foods Limited (Opco), the main operating company in the McCain Group, was
restructured to include independent directors, management representatives, and
a representative from Holdco.
As the dispute between the brothers continued to escalate, the families of
Andrew and Bob sided with Harrison and, in 1994, the Holdco board voted
to fire Wallace from his job as co-CEO of McCain Foods. However, Wallace
remained as vice-chairman of Opco and retained his one-third ownership of
the company.
158 f rom the Ground up
the home front 159
At the research farm in 2006. In the
background, across the river, is the
Florenceville plant; the village of
Florenceville lies to the right. Left
to right: Don Wishart (retired),*
Dick Cyr, Jim Bushby, Don Peabody
(retired),* Milford Kinney (retired),
Ken Cossaboom (retired), Paul Dean
(retired), Murray Lovely (retired),*
Marilyn Strong (retired),* Scoop
Fredstrom, Paul Page (retired),* Dave
Morgan (retired). Asterisks indicate
retirees with thirty-five or more years
of service. The other retirees all have
between twenty and thirty-five years
of service.