THE NATION’S BUSINESS

Feud of the century: a McCain speaks out

‘For God’s sake don’t do it,' Harrison begged his brother. ‘It’s a very bad deal.’ But Wallace broke their mutual veto and the troubles began.

Peter C. Newman September 26 1994
THE NATION’S BUSINESS

Feud of the century: a McCain speaks out

‘For God’s sake don’t do it,' Harrison begged his brother. ‘It’s a very bad deal.’ But Wallace broke their mutual veto and the troubles began.

Peter C. Newman September 26 1994

Feud of the century: a McCain speaks out

THE NATION’S BUSINESS

PETER C. NEWMAN

‘For God’s sake don’t do it,' Harrison begged his brother. ‘It’s a very bad deal.’ But Wallace broke their mutual veto and the troubles began.

For 38 years, Wallace and Harrison McCain had enjoyed an ideal working relationship. “We didn’t have enough trouble to put in your eye,” Harrison told me in an exclusive interview last week. “Just no God damn trouble in the world. We got along splendidly. He’s still a good fellow. I’m not angry or sore at Wallace, just disappointed in him some days. He has his own pressures.”

The fight started when talk between the brothers, who each own 33.5 per cent of the hugely profitable (net profit of $84.3 million for last year) McCain empire, turned to succession. (Wallace is 64; Harrison 66.) Wallace was determined to groom his 35-year-old son, Michael, as the next CEO and in 1990, he let it be known he would appoint him head of the company’s U.S. operations. “I thought he was just taking advantage of the situation in doing that, and I said so at the top of my voice,” Harrison recalls of a dramatic confrontation prior to the announcement. “I never claimed that Michael was stupid or that he was lazy. I just felt he wasn’t ready and that his appointment made us look bad to the professional managers we employ around the world. I told Wallace that his son’s promotion wasn’t justified and was far, far too nepotistic.”

Wallace walked out of that session to fly aboard the McCain corporate jet to a previously scheduled meeting in the United States and Harrison reached him in midair through their VHF telephone link. “For God’s sake don’t do it,” the elder brother pleaded again with Wallace. “It’s a very, very bad deal, and I’m going to take it very seriously. I absolutely don’t want you to do that. But Wallace appointed Michael anyway and that broke the long, time-honored mutual veto between us. The trouble went on from there.” (The positions occupied by Scott, Wallace’s other son, a vice-president of production for McCain Foods, and Harrison’s son, Peter, a vice-president of export sales, are not in dispute.) Wallace’s unilateral promotion of his son

didn’t automatically indicate that Michael would be in line for the succession as head of the family firm, but it proved to Harrison and the other shareholders that regardless of what other people wanted to do, Wallace had set out on his own course, acting as if he possessed the sole decision-making authority. “And that’s what’s been the problem ever since—who would be the next boss,” says Harrison. “I’m getting more and more ancient and I’ve wanted to make that decision right away, to get it over with so that everybody knows where they stand. That choice has not yet been made, but I firmly believe in a meritocracy and that’s how the situation will be resolved.” The stakes are huge. McCain Foods Ltd.’s sales in the year ended June 30,1994, totalled $3.2 billion.

During our conversation, Harrison insisted that the next McCain CEO would be recruited outside the family and that this is the way he wanted it to be, though it means that he—as well as Wallace—will have to give up being and acting as chief executive officers. (‘We have a lot of good kids there. Five or 10 years from now, it may be a different story completely and Wallace’s kids will be just as well placed as anybody else’s. Meanwhile, we

must have the company professionally managed. We can’t just turn it over to our kids before they’re ready.”)

The new McCain enterprise will no longer be run out of Florenceville, the New Brunswick village where Andrew McCain (1878-1953), their father, pioneered the business by selling seed potatoes to Latin America. “I want the official head office kept here indefinitely because we create great jobs for all the local kids,” Harrison says. “Our computer department alone employs 90 people. But things have to change at the top and the new CEO will run the company from wherever seems best to him. Hopefully, I’ll remain chairman for a few years, or if I’m not elected, I’ll stay on as a director. I’m neither jealous, nor am I deeply worried about somebody else running McCain’s. It’s gotta be done.”

One of the earlier compromises suggested by Wallace involved taking McCain Foods public, but it wasn’t a route that won much support outside his own immediate family. “If I had been assured that it would have ended the problem,” says Harrison, “I might have done it—providing Wallace supplied half the shares from his holdings and another 10 per cent were taken out of the treasury. But none of the other shareholders agreed with going public because they didn’t want to dilute the value of their holdings. We’re private about our financial matters and we can raise all the money we need without going public. We have no reason to be held to ransom.”

Wallace’s chances of getting his way seem slim because he has been outvoted by the other 33 family members at every turn.

Looking back on how the family has been torn apart in the past four years, Harrison McCain regrets the quarrel ever started. “I never thought I’d find myself in this position,” he laments.

His regrets run much deeper than the fight for corporate succession would indicate. The roots of the quarrel are intensely personal and, in one case, even went beyond the grave. When Harrison’s wife, Marion (Billie), a highly popular member of the clan, died on March 30 after a long struggle with cancer, Wallace went to the church funeral service and came to visit Harrison at home the day before, but the rest of his family stayed away. They didn’t attend the graveside ceremony, nor did they call at the Harrison house afterwards—even though, according to Harrison, they had been specifically asked to pay their last respects. In June, when Wallace’s wife, Margaret, was sworn in as New Brunswick’s lieutenant-governor, Harrison and his family stayed away. “We were not invited,” Harrison flatly declares.

Is there a way to resolve the quarrel? “Of course there is,” Harrison contends. “Of course there is—that’s why we’re in court with huge batteries of lawyers and all that damn expense. But is there a fair way to fix it? I don’t know. I haven’t been able to identify what that would be to suit Wallace, and I haven’t been able to accept what Wallace thinks would be a fair deal for me.”

The feud goes on.