Ritter chairman and CEO talk governance, succession
Somewhere between 10-15 percent of family-owned businesses nationwide remain in the family into the fifth generation. Established in 1886 by Ernest Ritter as a farm, E. Ritter and Company is one of those businesses. Dan Hatzenbuehler, who stepped down from his position as CEO Jan. 1, became concerned about the level of family engagement with the company in 2005 and has since worked to change that.
Hatzenbuehler, who is married to a fourth-generation member of the Ritter family, said that in 2005 he and Ritter Arnold were the family members working for the company. The Board of Directors was made up of eight people, six of whom were members of the Ritter family, but most company shareholders did not attend meetings. The company has around 40 shareholders living coast to coast and ranging in age from 20s to 80s. Hatzenbuehler had long thought it okay if shareholders did not feel the need to be more involved in the company, but he began to worry that if they did not take a more active interest, the company would not remain family-owned much longer.
"If we have shareholders who aren't knowledgeable or engaged, that's a recipe for disaster," Hatzenbuehler said.
The company started educational programs to educate the fifth generation about the company. "We immediately saw lightbulbs go on. They got it and were intrigued by it. We were successful in generating interest," Hatzenbuehler said. "At the same time, the business began to grow, and it became apparent we needed the very best talent on the board of directors. We needed people with technical skills family members didn't have."
With the acquisition of cable tv systems and the growing complexity of the agricultural business, Hatzenbuehler said it often happened that the board did not have the right expertise to know they were making the best decisions.
As a result, the board was restructured to include five independent directors and four family members. To balance this change, a Ritter Family Council of seven was established with members voted in by family members. The council works to get the next generation of family members engaged in the company and organizes social events, family meetings, and philanthropic endeavors. "Their responsibility is to be in charge of the business of the family," Hatzenbuehler said. "There has been a significant effort to actively engage all family members. At the same time, there is the assurance that we have a board very focused on making the best decisions for the business. This has strengthened the business and the family. If the family is not excited, the company is difficult to maintain as a business," he said.
Independent members were elected to the board in 2009. They were totally supported by the family, Hatzenbuehler said, and family shareholders did not have to fear giving up control of the company because they voted for the board members and the family council would keep current and new generations involved in the company.
Thinking about the future, Hatzenbuehler also realized the company needed to get intentional about succession. He said E. Ritter and Company had too many instances in its history of people becoming president in the wake of tragedy without the time to plan an orderly succession. When Hatzenbuehler turned 62, he talked to the board about starting a formal process to look for the next CEO.
In January of 2011 a search committee was formed, a professional search firm was hired, and with input from the board and family members a profile was put together detailing the type of CEO the family wanted. Charles R. "Chip" Dickinson, Jr. was chosen. He worked with Hatzenbuehler for a year before assuming the role of CEO effective Jan. 1 of this year while Hatzenbuehler retained the position of Chairman of the Board. Prior to joining E. Ritter and Co., Dickinson had been president of Anderson-Tully Worldwide, a timber management and hardwood lumber company that had been family-owned from 1889 until 2006 when it was acquired by a private equity company. "Anderson-Tully enjoyed a lot of success as a family business, but some of the ownership had gotten outside the company," Dickinson said.
Dickinson married into the Tully family. He said during his time with Anderson-Tully, he gained an understanding of the dynamics and benefit of family ownership. "The statistics say a good family business can be more successful than a private business," Dickinson said.
"Chip saw what can happen when the family doesn't stay engaged," Hatzenbuehler said. "He brought a wealth of experience in the importance of family engagement."
Before Dickinson took over as CEO, Hatzenbuehler was serving as both Chairman of the Board and CEO and felt he was not doing either job well. "By Chip taking over, he is laser-focused on growing the business," Hatzenbuehler said. "That frees me up to work with the board. He handles the business of the business. I handle the business of the family. The Ritter family is at the very core of this organization. I look forward to working more closely with the Family Council and the younger generations to facilitate more effective communications, and forge a stronger bond,between the family and the Board."
Dickinson said he was impressed by the unity of vision E. Ritter and Co. shared. "The company has done a phenomenal job," Dickinson said. "We have very talented team managers who are young and energetic. They have some bright ideas and are motivated to doing a wonderful job."
Dickinson will be focused on operations within Ritter Communications Holdings and Ritter Agribusiness Holdings. "I've had the unique opportunity of observing Dan as our CEO for the past year, while also preparing for my new role," said Dickinson. "I have learned a lot about this company and I admire the productive relationships that exist among its board members, family members, employees, customers and the communities it serves."
Other leadership changes include the following:
*Ritter Arnold has assumed primary responsibility for the Company's external affairs, focusing on the relationships its divisions have with the communities they serve and on philanthropic interests. Arnold has also volunteered extensively in leadership roles for organizations such as Arkansas Boll Weevil Eradication Foundation, Methodist Family Health, Eastern Arkansas Boy Scout Council and the Arkansas Agricultural Council. He currently serves on the boards of Arkansas Children's Hospital Foundation and Arkansas Research Alliance.
*Kenny Traynom will lead the Agribusiness Division of E. Ritter and Co., which currently operates Ritter Farms, Ritter Farms Management, Ritter Grain Services and is a partner in RHM Gin. Prior to joining Ritter in 2010, he served in strategic and financial roles with Morgan Keegan and Company, Monsanto, Valent and as a financial advisor to various companies and family businesses in the agricultural sector. As President of Ritter Agribusiness Holdings, Traynom will provide senior executive direction and oversight to existing and future initiatives, including partnerships and joint ventures.