Family dynasties can lead to business dramas

Your Money

September 17, 2006|By Andrew Leckey | Andrew Leckey,Tribune Media Services

I've always marveled at family businesses.

After all, many families can't agree on who merits a drumstick at Thanksgiving. The reading of a patriarch's will can prompt dueling lawsuits.

No surprise

The summer after high school I worked in the warehouse of a large family-owned catalog company. The sons left at noon for the golf course and the aging founder unfortunately had deteriorated to the point where he could barely remember their names.

It came as no surprise to me that the catalog company later failed.

Sometimes a family carries on for several generations, even at giant companies. Motorola Inc. was founded by Paul Galvin and his brother, Joseph, in 1928 and later run by Paul's son, Robert. Paul's grandson, Christopher, took the helm for nearly seven years but was replaced by a non-family chief executive, Edward Zander.

When Rupert Murdoch's son, Lachlan, left News Corp., experts immediately began speculating which sibling would eventually succeed their dad.

Other dynasties are thriving: I have on occasion met real-life Nordstrom Inc. and Walgreen Co. family members.

The Ford story

Ford Motor Co. is an intriguing family story because its product is as American as apple pie. It has experienced the tugs and pulls of every family operation.

Founded by Henry Ford in 1903, it introduced the black Model T that revolutionized transportation. Old Henry didn't keep up with the times, however. A more modern "give-them-any-color-car-they-want" General Motors Corp. passed the company by.

Henry's son, Edsel, when serving as Ford president, became worn down as he constantly implored his pop to get with it, and he passed away in 1943 at age 49. The poor fella received the posthumous honor of the failed Edsel car being named for him. Edsel's son Henry II resuscitated the carmaker after World War II and turned it into a publicly traded corporation in 1956. The family maintains 40 percent controlling interest in the firm.

Now William Clay Ford Jr., 49-year-old great-grandson of founder Henry Ford, after a much-criticized reign, has turned over the CEO reins to Boeing executive Alan R. Mulally. Bill Ford stays on as chairman, but he even said the Ford family would be willing to consider giving up some of its stake "if the right thing" came along.

How badly did Ford's board want a professional CEO? It gave Mulally $18.5 million in a one-time grant and $2 million in salary. That's how badly.

Ford stock these days is pretty much a "hold" on Wall Street, with views all over the place because the future seems uncertain. Looks like there's no Ford in that future.

So next time you stop in a family restaurant, bar, floral shop or dry cleaner, give the owner a smile. It's not easy being a family business in America.

Andrew Leckey writes for Tribune Media Services.

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