By Dennis Haslam
Family governance and corporate governance go hand in hand. Gail Miller, owner of The Larry H. Miller (LHM) Group of Companies and chairman of LHM Management Corporation, knows that a family board of managers and a corporate board of directors are key to the long-term health and viability of the enterprise.
Founded in 1979, the LHM Group of Companies began with the purchase of a single Toyota dealership in Murray, Utah, which consumed the founders’ life savings. For 30 years, the enterprise grew and flourished under Larry H. Miller’s brilliant leadership. Today, LHM focuses in five areas: automotive dealerships, finance and insurance, real estate, sports and entertainment, and family philanthropy. It is a multibillion-dollar company that encompasses more than 80 operating entities with over 10,000 employees, principally in the Western United States. When Larry died in 2009, Gail was left to preserve the legacy of a business they had dedicated most of their lives to building together.
Upon Larry’s passing, their eldest son, Greg Miller, became chief executive officer (CEO). In 2015, Greg stepped down. Charting out a future course was a daunting task for Gail, a former stay-at-home mom. For the first time in LHM’s 35-year history, she named a non-family CEO to assume the responsibility for executing the organization’s strategy and operations.
For next steps, Gail called me, a long-time confidant. I had served as outside counsel to Gail and Larry for many years and worked as an executive with the company. She determined it was necessary to create a family governance system (a family board of managers) as well a professional board of directors for the business. The board of directors would be composed of independent directors (six), family shareholders (four — Gail and three sons), the CEO and a “gray” director (not independent, but not an employee of the company — I currently fill this role).
Following a detailed search of private company bylaws and articles of incorporation, I came across the National Association of Corporate Directors (NACD) and joined as an individual. NACD had members across the country, from all types of organizations, industries and walks of life. I met others who understood family-owned businesses and the issues that come with them. With better data and research in hand, I outlined a patchwork of ideas and presented my plan to Gail.
Formalizing a corporate board of directors proved to be challenging. The notion was foreign to the Miller family. Historically, Larry had had the final word on any decision or proposal. He trusted his own business and entrepreneurial knowledge, as well as the counsel and advice of a handful of close friends. Gail’s idea to ask independent directors to weigh in on strategy and for the board to have governance authority constituted a structural change and new operating model.
Under Gail’s direction, we created a balanced and diverse board that had expertise in industries or areas similar to ours: high-price-point retail items, risk and insurance, large family-owned companies, and governance.
The early days of the board were not without growing pains. About two years ago, things finally began to “click” with trust from the family. Now many of the family members say the board is something “our dad would have wanted. He would be happy.”
LHM is more than just business operations. The company’s culture is anchored in dyed-in-the-wool principles and dedication to community service. Employees are proud of what the company stands for, and board members continue to learn about “the secret recipe.”
One of the board’s crowning achievements was last year’s CEO search. When the company’s first non-family CEO announced his retirement last January, Gail formed a search committee consisting of family and independent directors. The company then retained a national search firm, reviewed dozens of résumés, and interviewed internal and external candidates. With strong support from the board, Steve Starks, a 13-year employee of the company who had risen rapidly through the ranks, has taken the reins. Since his appointment, he has attended two board meetings and is developing important relationships with both family and independent directors. He and the board communicate often, they express areas of concern early, and they respect one another’s roles. Their relationship demonstrates five years of progress and learning, and it’s the best it’s ever been.
Our board is currently focused on strong corporate governance, diversity and inclusion, business continuity and cybersecurity, succession planning and employee development, and innovation and growth.
I credit Gail with the foresight as well as the willingness to listen, learn and lead. She has the courage to do what’s right and effectively communicate change. Gail and her family cherish the LHM Group of Companies, our employees, our customers and our partners. Ultimately, they honor the organization they built and its larger purpose in the world. The corporate board of directors will ensure its legacy lives on.
Dennis Haslam is a founding member of the Larry H. Miller Management Corporation’s board of directors. He was formerly president of the Utah Jazz from 1997-2007, as well as president of Larry H. Miller Sports & Entertainment. He is the owner of DH Consulting & Investment, LLC.