LAVAL, Quebec -- Key leadership at Alimentation Couche-Tard Inc., the parent company of Circle K convenience stores, is angling to maintain control of the company longer than current corporate bylaws allow.
The company is asking its shareholders to approve amendments that would maintain its dual-class structure longer, so that its four founders can remain involved in guiding the chain for years to come, according to a proxy circular filed this past week for the upcoming annual shareholder meeting.
Together, co-founders and directors of the board Alain Bouchard (executive chairman of the board), Jacques D’Amours (former vice president of administration), Richard Fortin (former CFO) and Réal Plourde (former COO) currently own about 22.7% of the issued and outstanding shares of Couche-Tard, according to the SEC documents. Most of these shares are multiple-voting shares with 10 votes each, but they are subject to a sunset provision that would remove their superior voting status when:
- the youngest of the founders turns 65 years old or passes away, whichever happens first; or
- the day when the founders hold, directly or indirectly, collectively less than 50% of the voting rights attached to all outstanding voting shares of Couche-Tard.
According to media reports, D’Amours is the youngest at age 58, followed by Plourde (65) and Bouchard and Fortin, who are both 66 years old. Bouchard retired as president and CEO of Couche-Tard in September 2014, replaced by Brian Hannasch. In March, the company completed its acquisition of The Pantry convenience-store chain and is still integrating the more than 1,500 stores that were part of its Southeast network.
Now Couche-Tard is asking shareholders during its Sept. 22 annual meeting to vote on amendments that would keep the dual-class structure until whichever happens earliest:
- the day when none of the founders is a director of Couche-Tard; or
- the day when the founders and/or their family members, directly or indirectly, collectively hold less than 50% of the voting rights attached to all outstanding voting shares of Couche-Tard.
“The four founders of Couche-Tard have been involved with the company since inception,” said Bouchard. “We want to continue growing our company and creating value for our shareholders. When the company became publicly listed in 1986, the shares were priced at $2.25; as at July 17, 2015, these same shares (now subordinate voting shares) are worth $1,392, taking into account the series of share splits, an increase of almost 650 times!
“I believe that our continued involvement will allow Couche-Tard to build on its strong foundation,” he continued. “We would like to continue focusing on long-term value creation, which has been key to our success. We want to work closely with the new generation of employees, mentoring them to the best of our knowledge, sharing with them our expertise and know-how. We also want to preserve the 40-plus year relationship the four of us have built with industry leaders and suppliers.”
A special committee of three independent members of Couche-Tard’s board of directors concluded unanimously that the proposed amendments were in the best interests of the company and fair to Couche-Tard shareholders (beyond the founders and their families). They recommended—and received—board approval (the founders and one additional director abstained) and its recommendation that holders of multiple and subordinate voting shares (other than the founders and associated entities) vote for the changes.
Also as part of the changes, holders of Class B subordinate voting shares of Couche-Tard would get the right to elect separately the nearest whole number to 30% of the directors of Couche-Tard (or three of the current 11 directors, initially). Because of this, the minimum number of directors to be elected annually would be increased from three to 11. Holders of Class A multiple voting shares and the holders of Class B subordinate voting shares would vote separately as a class to modify the minimum number of directors.
Laval, Quebec-based Couche-Tard operates a network of more than 6,300 convenience stores throughout North America (more than 7,800 including The Pantry). Its North American network consists of 13 business units, including nine in the United States (under the Circle K brand) in 40 states and four business units in Canada (under the Mac's and Couche-Tard brands) covering all 10 provinces.
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