Eleanor McCain in Toronto in April, 2017. Ms McCain is making the same legal arguments that her father, Wallace McCain, made 30 years ago.Galit Rodan/The Canadian Press
Eleanor McCain has opened a new front in a feud that has gripped the McCain family for more than 40 years and nearly tore apart McCain Foods Ltd., one of Canada’s best known companies.
Ms. McCain is suing relatives for allegedly thwarting her efforts to sell her stake in the company, which is worth more than $1-billion. In court filings she portrays the family as controlling, wary of outsiders and determined to keep a firm grip on McCain Foods through strict “family guiding principles.”
She has been warned, the lawsuit alleges, that if she sells her shares to an outsider, “her immediate family would be alienated from the McCain clan.”
And she’s making the same legal arguments that her father, Wallace McCain, made 30 years ago: that the family’s conduct is oppressive.
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None of the allegations have been proven and in a statement the family holding company, McCain Foods Group Inc., or MFGI, said, “The claims made in the lawsuit are without merit.”
McCain Foods has always been a tightly controlled family business. It was founded in 1956 by Wallace and his brother Harrison in their hometown of Florenceville, N.B. They had little more than a good idea; $100,000 from their father, a local produce dealer; and help from their older brothers Robert and Andrew.
Wallace and Harrison each took a one-third ownership stake, while Robert and Andrew received roughly 16 per cent a piece.
Their timing was impeccable. The brothers’ frozen French fries hit the market just as the fast-food craze was building, led by a new chain called McDonald’s, which has been a major buyer for more than 40 years. McCain Foods quickly grew and today its annual revenue tops $16-billion and its products can be found in 160 countries.
For years, Wallace and Harrison worked as equals. They were co-chief executives and lived side by side in mansions overlooking Florenceville. But as the next generation began to take on roles in the company, tension mounted.
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By the 1980s, Wallace was quietly fuming as Harrison promoted their nephew Allison, the son of uncle Andrew. Harrison couldn’t stand Wallace promoting his son, Michael.
The tension boiled over in 1990 when Wallace appointed Michael head of McCain’s U.S. operations despite Harrison’s objections. “You are going to have to be held accountable for this and you are going to regret it,” Harrison told his brother at the time.
Harrison and other family members responded by moving to dilute Wallace’s influence. They created a dual-board structure at McCain – one for MFGI and one for McCain Foods.
MFGI owned all the shares in McCain Foods and its seven-member board consisted of two directors each from the Wallace and Harrison families, one each from Robert’s and Andrew’s family, and one outsider. The McCain Foods board was made up of company executives and outsiders. The two-board structure, and ownership by MFGI, remains the same today.
The feuding between the brothers ended up in court in 1994, after the MFGI board voted to demote Wallace. The board also rejected various offers from him to buy out other family members. He also proposed dividing McCain Foods or selling the company entirely, which they also opposed.
The family agreed on private arbitration before New Brunswick Justice Ronald Stevenson. He largely sided with Harrison and the others.
But in a private letter to the brothers, Justice Stevenson urged them to drop the two-board structure. The family-only board “has not worked and will not work for McCain,” the judge wrote. He suggested “the company should seriously consider a public equity issue” because non-family shareholders “would act as a restraint on inter- and intra-family disputes.”
The McCains had received similar advice in 1990 when John Ward, a family business consultant, was hired to consider the two-board proposal. He told both brothers it was a bad idea and that the MFGI board would put the interests of McCains above everything else. It would only work if five outside directors were added who could overrule family members, he said.
Wallace and Michael ultimately left McCain Foods and bought control of Maple Leaf Foods Inc. in 1995. But Wallace kept his McCain shares, which were passed on to his children after he died in 2011. Harrison died in 2004 and his shares were also passed to his descendant.
According to Eleanor’s lawsuit, the two-board structure has remained in place and the family has doubled down on keeping control.
There are now 55 family members who own shares, representing the second and third generations.
Ms. McCain alleges MFGI has tightened control by making it virtually impossible to sell shares to anyone outside the family. The holding company also deliberately undervalues the shares, she alleged, to ease tax liabilities and make it uneconomical to sell shares back to MFGI.
The lower valuations also help company executives meet their performance targets, which she claims has boosted compensation. According to the lawsuit, the total pay package of McCain’s CEO Max Koeune in 2025 was “more than twice the target pay package of the CEO of Royal Bank of Canada.”
To further its control, Ms. McCain alleged that MFGI requires family members to complete a tax survey which asks if they own things such as art, jewellery and yachts. Each family member’s net worth is calculated to determine if they will be able to meet estate tax obligations. MFGI expects family members to sell personal belongings to cover tax liabilities to ensure shares aren’t sold.
The holding company has gone further, she alleged, and drawn up a list of “family guiding principles” designed to keep McCain Foods as “our collective family business.” MFGI allegedly carries out a personal values exercise “to impose homogeneous values on all family shareholders.” Among the questions asked is “What motivates your choices in the way you live.”