Balancing Business and Family: MacLean-Fogg’s board dynamics include both the professional and the personal.
MacLean-Fogg has annual revenues of more than $1 billion and a professional, majority independent fiduciary board, but there are still governance moments that are genuinely personal. That’s when the owners and the board strike a balance so both can be successful.
MacLean-Fogg has two primary businesses: MacLean-Fogg Power Systems, which serves the electric utility, telecommunications and civil markets; and MacLean-Fogg Component Solutions, which serves the automotive, heavy truck and other industries. There are seven non-family directors and three family members on the board. “We really believe that independent directors are very important, and that’s reflected in the composition of our board,” says fourth-generation CEO Duncan MacLean. “But it’s not a pure outside board like you might have in a public company. You also want people that understand the dynamics of a family enterprise, because it’s not always cut and dried.”
MacLean says his father, Barry, had a board made up of friends who tended to agree with him. When Duncan became CEO in 2017, most of the board had watched him grow up, and it was hard to break the impression that he was too young and inexperienced, even though he held two advanced degrees and had run a successful division of the Illinois-based company. He was able to win them over.
Barry remains chairman of the company, and he and Duncan are navigating their respective positions to get what they each believe they need from board meetings. Duncan wants to discuss long-term strategy as the CEO of a billion-dollar company, while his father is often focused on the everyday details, as he was in the early days of running the business.
Duncan sets the meeting agendas and Barry runs the meetings. At one meeting, Duncan wanted to talk about long-term issues, such as how electric cars would affect the company’s automotive components business and how federal infrastructure legislation would affect its utility business.
“My dad said, ‘Duncan, the meeting is yours.’ I said, ‘OK, I assume everybody read the material. I’d like to talk about this.’ And Barry says, ‘No, no, no, no. Wait a minute. What happened on Tuesday, last week, on the third shift? I want to know that.’”
The board helps ensure proper boundaries between family and business not only in communications between Duncan and his father, but also between Duncan and his four sisters. He defers to the directors to discuss what could be emotional topics, including dividend programs. To be successful here, his sisters must trust and support the board. To that end, Duncan makes sure that all board action is transparent.
For example, when the company conducted a search for a board member, it hired an outside consultant. The new board member, who was onboarded during COVID, has the full support of Duncan’s sisters.
“If we did not run a process with the consultant that they felt comfortable with, that would have undermined the contributions that any future board member could make,” he says. “The choice has to have the integrity that it’s not just my pick. It has to be, ‘Is this a qualified individual to sit on the board of a billion-dollar company and represent me as a minority shareholder in that room against my brother or with my brother?’”
They may not all work in the business, but the enterprise is ultimately in the hands of the MacLean family.
“Directors have to be willing to understand that if we’re going to make a decision, sometimes it’s not going to be the best decision, but it’s going to be the best decision for the family,” Duncan says. “So, while they have a fiduciary role to protect the shareholders and the stakeholders of MacLean-Fogg, they also are working at the invitation of the MacLean family. There is this little tightrope that they’ve got to walk between being a fiduciary in the business and being a good steward for our family enterprise."