A man passes by a Couche Tard convenience store in Montreal, Friday, October 5, 2012.Graham Hughes/The Canadian Press
For years convenience-store giant Alimentation Couche-Tard Inc. has seemed like the most enlightened of Quebec's dual-class share public companies, relatively speaking.
Yes, it had two classes of shares that left majority voting power with the four founders – including executive chairman and retired CEO Alain Bouchard – despite the fact they collectively own just 22.7 per cent of the equity. But the 10-to-one voting rights on their Class A shares came with a sunset clause: on the first day when all founders (including retired executives Jacques D'Amours, Richard Fortin and Réal Plourde) were 65 years old or when they collectively held less than half of the voting rights, their stock would lose its superior voting rights. That would have happened no later than 2021 when Mr. D'Amours turned 65.
Now, however, the founders – three of whom are billionaires – are looking to hold on. "We would like to continue playing a key strategic role in growing Couche-Tard and we believe this is in the interests of all stakeholders," Mr. Bouchard says in the circular for the company's Sept. 22 annual meeting, filed Friday with regulators.
If shareholders agree with their proposal, the Freedom 65 clause would be killed. Instead, the dual-class structure would remain until the last of the quartet has left the board or the founders or their families together control less than half of the voting rights. It's not forever, and in exchange, the four are offering a concession: rather than everyone casting their ballots together – – which left subordinate shareholders with no power – the Class B shareholders will now get to directly select 30 per cent of the board.
Companies with dual-class shares have a good case for keeping tight control in the hands of the few so long as can show it is to everyone's benefit. Mr. Bouchard offers some evidence to back that up. The company's stock has increased in value by 650 times since its 1986 IPO and eight-fold in the past five years, and it is in no small part due to its entrepreneurially minded operator/founders. "We never had a short-term, quarter-to-quarter vision," Mr. Bouchard writes. "Instead, we believed in building a great company for many generations, offering great employment opportunity across the world as well as value for Couche-Tard's shareholders and stakeholders."
Corporate governance experts may disapprove, but shareholders have done well by this benevolent corporate autocracy. It will be little surprise if the vote passes.