Planning for the next seven generations with Libby Nelson

Sure. So I graduated from Washington University in 1977 and then my law degree was from Drake. And when I started in 1980, Kemin was just not big enough to have in-house counsel, so I didn't have an option to join Kemin. I took a job, I worked in Milwaukee for a year and then I came back. I worked in Des Moines for the Iowa, at the time it was called the Iowa Commission on Aging. And then I clerked for the bankruptcy court. It's going to sound like I can't hold a job, but then I worked for the Attorney General's office in the Department of Revenue. So if you're starting to kind of hear a theme here, there's a bit of a business theme here.

And then I was in private practice in Des Moines and then I moved over to the Industrial Commissioner's office. And then from there I moved back to the Attorney General's office and I represented agencies basically that I would call transactional agencies for the state. People like the lottery, so intellectual property, I did intellectual property and contracts there. And I represented General Services, which is the purchasing agent for the state of Iowa. At the time it was, I think now it's the Department of Administration, I'm not sure what it's called now. But my job was to read contracts, defend appeals, write RFPs. I also worked for the ICN, so I learned a lot about fiber optics and fiber optic networks and rights of way and how to install things in the ground. I also represented the Treasurer, the Auditor, sometimes the Department of Personnel, the Iowa Finance Authority, Iowa Higher Education Authority. So I had this bucket of clients that I represented. And then I moved over to the Iowa Finance Authority for a little while to be their in-house counsel, so learned about bonds and financing. And then I moved back to the Attorney General's office and I was still representing the ICN and doing transactional work. And then I joined Kemin as in-house counsel in 2001, right after 9/11 actually, so it was November. I joined in November 2001. So my experience I would say definitely has helped me in this job. When I was with the state, the state built a new prison, so I reviewed architects' contracts and building contracts for that. I didn't do the land work, the property work there, but I did property work. I had some trial work that I did, basically administrative but also some trial work when I was representing the lottery and other agencies. So it was a broad, I would say a very broad background. When I landed at Kemin, probably the only piece that I did not have was a lot of science, but since I had grown up with it, I knew the names of all the products and I knew what they did. Could I draw the molecules? No. Could I draw the molecules now? I can draw some of them.

No, we had dinner, I had dinner with my parents every Friday night. And then when my kids were growing up, they were living in the house that I grew up in on 18th Street until 2001. So when I had my kids, same church, you know, I would see them Sunday morning. Friday nights we would go. We did vacations together, so I spent a lot of time with my folks. So every Friday night they would tell us what was going on. And we would have shareholder meetings every year. So we started having shareholder meetings when I was probably like my first year, probably when we were in college, we started having regular shareholder meetings on Christmas Day.

Oh yeah, everybody was home and we had time. And so we would just sit down, we'd have the shareholder meeting. And we would also have shareholder meetings along the way. It was really important to my parents that they were transparent about the business. Are we doing okay, are we not doing okay? And because when we were growing up, one of my goals had always been to join Kemin, but like I said, in 1977 when I was graduating from college, Kemin wasn't big enough.

Because we had all worked for Kemin growing up. So because we were sort of available labor and we were able to do repetitive jobs that didn't require a lot of skill. One of the things that our company developed was an applicator system that had a lot of parts. And so we set up the part packing department in our basement.

We would sit and, yeah. Chris was old enough to handle the drill, so when we were done with the applicator pieces, once they had been screwed together, it had a regulator on it that stuck out of the box. So you'd have to drill a hole through the box so that you could put the regulator through the box and then you'd screw it on. So that was Chris's job because it involved a drill. I did a few of those, but we did sit and watch TV and we wound a lot of Teflon tape around brass fittings. And then the packets would go with nozzles and the packets would go with the applicator and then the applicator would be sold with a forage preservative product.

So my mother was ready to step back a little bit from her duties because she was really sort of running that piece of our intellectual property portfolio. And so she called one day and said, hey, you know, you want to come over and start and do this? And I said yes. And so she basically turned over to me the trademark portfolio, the patent portfolio. And then when I got here, the other thing I started to work on was just improving the quality of our contracts and then working on land transactions and also regulatory things and also supporting the HR function, so employment.

I was. Well, not right at first, but I got busy after.

Well, so we've given everybody an opportunity to intern here. We basically have reserved slots for grandchildren internships, that's what they're called. After high school, because we haven't had anybody here during high school because it's not safe. So you have to be at least 18. And generally it's best if they don't work for me. We've had people who've interned at our research farm in Kellerton, we've had people who've worked in the lab, we've had people who've worked for regulatory groups for other business units. My son happened to be interested in going to law school, so he did work for me but he had a different supervisor. My other son is a software developer and we have talked from time to time about could he work for Kemin, would he be interested in doing that. He would, but he doesn't want to leave Chicago. And my other son just graduated from Marquette this last summer, so he's now in the process of, he's moved back here, he's going to take the Iowa bar in February, but he's going to start and look for work either here in Wisconsin or Iowa.

So we have drafted a family constitution, which was an idea that we picked up from YPO. And basically the family constitution pretty much kind of describes the structure of the company, the shareholding, and then we have a whole section on employment. Part of the employment is, if you want to be an executive now at Kemin, you have to at least take chemistry, biology, and physics, because we're a science-based company. And you have to be able to, if you didn't grow up with it, which gen 3 did not, I mean they grew up with it sort of attenuated, then you have to have learned it somewhere and college seems to be the best place. Then you have to work somewhere for two years outside of Kemin before you join. And then you join with a real job, it's not a make-work job. The job has to be open, it would be like a basic scientist in the lab if you're in science, it would be an entry-level finance job like maybe accounts receivable or accounts payable. And then after that, the only other thing that we ask family members to do is come to the quarterly board of advisor meeting if they can and sit and observe. And then hopefully they progress in their career to a point where if they want to step into a leadership role at Kemin. But it doesn't mean like we're always going to have a Nelson who is the Chief Executive Officer of Kemin or the Chief Scientific Officer, because if the talent in the family doesn't go that deep, then we would rather have the company managed with professionals. But then the family then becomes really attentive business owners.

So what mostly what, so we're actually going to have somebody, one of the gen 3ers who's never been to a board meeting here in October. So it'll be a new experience for Whitney and her husband Andrew. Actually for this board meeting, we're, this is our global board, so we're flying everybody down to Norman, Oklahoma. We're going to tour one of our facilities there and then fly back and then have the meeting, so that's a little unusual. But what I hope they see in this is they kind of understand sort of the challenges that the business faces either currently or kind of into the future, and then what solutions the advisers would offer to help us kind of overcome those challenges. What we're looking for from this board, they don't have a fiduciary obligation. So we separate the board of advisers from the statutory board. But these folks we treat as regular board members and what we seek from them is, you know, we expect to hear from them, this is about the stupidest thing you guys could ever do, or that's a good idea, or they bring a totally different perspective. And what I would hope that a gen 3 person listening to this would appreciate is that these are business people who have different experiences than what we have and that they're all bringing a perspective that we can take advantage of. And my hope is that's what they get from the meeting.

And this is something that we've had for a long time. This is something my dad started, actually. So when Kemin was incorporated, so we started in 1961 but we weren't incorporated until 1963. R.W. had a really thoughtful attorney give him some advice on how to run Kemin. And Dave Bellan sat on our board for a long time, and he was the one who suggested the board of advisers concept, because he said, look, these are people you can invite in, you can pay them for their time and they can give you advice. And so he said, start with a banker, an accountant, and a lawyer. And so we did. And then the board, we expanded, so then we had marketing, operations, finance. And now on this board we have global marketing from an Asian perspective, we have data management and data analytics and data support, we have finance and accounting, we have global operational concepts for both dietary ingredients and agricultural and just basically the entire product line. And then we have a new adviser who's just joined us who is a consumer, his experience is consumer-based products, selling consumer-based products. So the board, this mix on the board now gives us, definitely from the consumer viewpoint, that's different since we're a B2B business, right? It gives us a whole different thought on how to approach markets and how to position products and how to think about large organizational concepts, because his company ran convenience stores and they had about 400 of them, so large organization, and then how to operate in a large organization.

We give this advice to our business units. You know, and sometimes we have some very small business units. R.W. started this, like I said, it was a long time ago, but when he had his board, he would meet with them quarterly. And the best advice he ever got was if all the only professionals you hire to help you run your business are a banker, an accountant, and a lawyer, then have those people help you be your initial board of advisers. You don't ask them to be your fiduciary board, because that just carries a lot of sometimes unpleasantness with it. But if you ask them to be your advisers and then you meet with them quarterly and bring them strategic questions, don't bring them unless there's something just wildly tactical that you need help with.

One of the things that we used to do with our board, we'd run through the financials and you know, and all of our board people, they all read financials very well. But so now what we're asking our presenters to do, and then we have functional people come in and talk about their particular area or their particular product line or challenges that they're having with either products or customers. And what we've set this up now is basically we do a pre-read, we send out the material, the board reads all of it, we have basically a short five-minute presentation and then questions. And it's a colloquy, it's basically a conversation with the board members for advice. And then if they say something to you like this would be a really good idea if you did X, or hey I just want to make you aware of Y, then you probably should follow that advice. And I think it's proven to be successful wherever we have set up a company. We followed this pathway in India, Singapore, China, Russia, South America, Africa, Europe, and it has proven to be very successful. It just builds a very strong foundation for the business.