Scott McCain: Family Office, Children & Charity

That's a good start. But who am I? Well, my name is James Scott McCain. I go by my middle name, which my mother made quite clear—she liked the name James but Scott was the one they were going to call me. So Scott's just fine. I've just turned 68 years old. When you ask where I'm from and where I live, there's two different answers. I'm from New Brunswick, little village of Florenceville, small, 750 people. That's where I'm from, that's where my roots are, that's where my passion is. But I live in Toronto, Ontario. I have three kids—Sarah's 37, Jennifer's 35, Jeffrey's 33—and I have four grandchildren. I'm at a pretty good stage in my life.

What do I do day to day? That's a good question. Somebody asked me where do you live and I said wherever my suitcase is. I'm on probably more boards than I should. I'm retired. I retired from a wonderful career at McCain Foods and Maple Leaf Foods—two big food processing companies. One's much more focused on Canada, the other one, which is McCain, is global. They're very different companies but all in food and agriculture. Today I'm on several boards, probably more than I should, but only because they're boards that I enjoy and I'm having fun with. And I've got one employee—my assistant Sarah Whitehead. So I'm at a good place in my life.

I'm actually in the McCain business. I'm G2.

The business was started by four brothers. My father Wallace and Uncle Harrison were the lead partners, but they had the support of two brothers, Robert and Andrew. Together they started this company called McCain Foods back in 1957. It's been a heck of a journey for the last 60—now 67 years. We wouldn't have enough time to go through all that, but it's been a good ride. And I'm G2, so that's now chairing the board and trying to make the most of that.

I had one brother—Michael. I was the oldest. One brother Michael, and two sisters, Martha and another.

We all grew up in New Brunswick.

I'd be happy to. Why don't we start with family office because that's the topic that's really important, and probably for your listeners. We started this journey of family office probably 20 years ago. It started out more as some help in the tax consulting space and it evolved over the last 20 years. It's remarkable to see the growth in family offices across Canada and the US and the world for that matter. It really simply boils down to most families or businesses that are fortunate to be in a position of having had some success—the complexity as they've grown is so large and so complex, and all the different demands on the business and on the family—a family office can help navigate all of those things rather than trying to do it on your own. And so our family office consists of my brother and two sisters. It's really made a difference in our lives. It started with tax but it quickly evolved into other things. We can help you do tax planning in a proactive way, we can help you with family things like relationships and marriage contracts, it can help you in philanthropy, it can help you in investing. They just become another group of individuals to help you navigate some very complex issues. It's getting more professional—today we have nine people in our family office. We started out with one. So as your family gets bigger and you have children and grandchildren and you're dealing with pressures from above and below, it becomes a real benefit.

The topic you're talking about—what I've been doing in the last 24 hours, so it's very fresh in my mind—is this notion of family in the business and family working together in some specific area. The area I'll touch on is philanthropy, which I think is important, and another one is how we might invest as a family. Most families try to say, let's all get around a common cause and have a strategic vision. Other families, I call it 'peanut butter funds'—whatever comes in as a request, if it looks good we'll do it. I think we do a little bit of both. But now I've decided to do something more individual—I set up a foundation for each of my kids, smaller ones, because what I've found is foundations become very personal. What my oldest might feel is important could be totally different from the younger one. Having them do their own will bode well long term because it can be challenging to get everybody to agree on where philanthropy should be placed. All models are good, and the fact that you have a family office to help navigate and execute is very important.

Correct. The guy that runs our family office, Jason Safar, is tremendous. His top clients are my sister and brother—three of us now, as one sister has moved on to another firm. But you quickly realize that the kids are just as important. When the kids have something they're dealing with, to hear something from their dad is one thing, but to hear it from the family office, who's got an independent voice, takes it to a whole new level. I can say things to my kids and they say, 'No Dad, that doesn't work.' But I can tell somebody in the family office, explain what I'm thinking, they can probably explain it better. So yes, they have clients at my level and at my children's level.

Big time. It's a bit like on your board—we have independent directors on our McCain board. When I set up this new company at JSM Capital, very likely we'll have some independent directors. People that have the voice of both sides and try to find common ground. It makes a big difference.

Can I make one more comment on the investing side? One of the big things that family offices do is help families navigate an investment strategy. What I've decided, and what I think others have done, is set up our own investment company. When I did it, I just ran forward and discussed it, but I quickly realized after spending time with some family communication consultants—as of yesterday—that I should step back and say, 'Scott, what is it you're trying to accomplish?' If it's something you want to do with your kids long-term, if it's something you want to be sustainable and not run into roadblocks early on, then you should map out exactly what you want to do, what roles your children are going to play, do they want to be owners, on the board, on the operating side. When I sat down with my kids with the help of a communications consultant to map out these things, it became very clear that all three of my children nodded emphatically that yes, Dad, we need to do this exercise. It's important work upfront before we embark on a strategy and take a shotgun approach. Families should use family business consultants who know this space, particularly in the area of communication. Often families' communications with the G2s and G3s aren't where they should be, and this process can help. It can help you articulate a path that everybody signs into, rather than me saying this is how it's going to be. That's a learning for me. I think I had a pretty good idea, but it's really solidified my desire to map this out properly with help from communication consultants and business consultants, so that it has legs to last well beyond when I'm gone.

Exactly.

Yeah, they see it. In fact, what we did—when Jason suggested we use a family business consultant, my kids and I, he said why don't I get two or three of the top ones that do this in Canada, and you interview them, you and your kids, and collectively pick one. So we did that. All three were excellent. We narrowed it down to two, and my children said, 'Well Dad, we like them both but we have a preference.' I said, 'Case closed.' That way they have significant ownership in the fact that these consultants are the ones. We've worked with them for two months now and they've been tremendous.

Agreed. We're doing it even at McCain Foods—we're getting our third generation much more engaged at that level than we ever did at my level at G2, and I'm seeing the huge benefits from that. It's tremendous success. We're using a Telfer program from the University of Ottawa, and it's really made a step change in how we think about the next generation and how we can get them more engaged.

It's a process that's important and if you do it right, you'll get long-lasting benefit, I think.

It really is. And look, trust me, succession planning is something that's near and dear to my heart. It's a challenge no matter what family, what size, what area, what country. But what's been really clear in my mind is that succession planning—whether you do it on a small scale like I'm doing with my family, making sure I set things up properly for my children and their children—it's not an event. It's not like, oh, it's time to deal with this now and I'm 80 or 75. Succession planning is a very elaborate, well-thought-out process. It's like a business process. People have business processes in marketing plans, financial plans—succession planning is another plan. Put focus on the word 'planning.' If you do your planning and you're inclusive and transparent and you've got the trust of those around you, you can have a high success rate.

Oh yeah. Well, look—in our family we had some challenges in the McCain family which became public, but that's behind us now, it really is. One thing I will say is that we all learned a tremendous amount. Many people would suggest that you learn more from some of your failures than your successes. In this case, I think we all learned a lot—a lot of mistakes made in different areas—but at the end of the day we were able to work through it and come out the other side. Today the McCain family is very strong. We've got a great management team of professionals. I think we're doing a lot of things on the governance side that are extraordinarily important and well thought out. And we have a lot of work being done to ensure that the next generation—G3 we call it—are becoming more engaged, at least understanding what this investment means, and developing a refined set of values that are important for any organization. I can tell you we have a very exciting future ahead of us.

I'm excited about that. And then on the personal front, I'm hoping we can do something at the JSM Capital level with my three children. Yeah, who knows where it'll end up. I don't know, we'll see. I'm looking forward to that journey.

Yeah, no, we did. What you experienced, Luke—I know your dad real well, and I know him well enough to know that he would probably—I'm not putting words in his mouth—he'd probably love for his sons to be in the business, because as parents that's exciting. I hope parents don't put too much emphasis on it because not everybody wants to, and if you do that, it's not healthy. Children should be able to do whatever they want, and if they don't have that inner passion, then it probably won't work. But your father would understand—he's made so many mistakes, and so have I, and so have all of us. If you don't make mistakes, you haven't done anything. A wise man once told me, hopefully the business is about making more successful decisions than unsuccessful ones—if you make them better than 50%, you should be fine. The expectations are there and that's not going to change. The only advice I would provide is that not everybody is cut out to do what their parents did in business. If you try to force it on your children, I would argue that's a mistake. The best model is being open and transparent about your wishes. If one or two or all want to carry on that legacy in some fashion, that should be mapped out, then it should be through invitation and not through pressure, because through pressure it won't work long term. People only have one life, and if they're not doing what they enjoy, it's not fair to them just because you think they should carry on the legacy. I had pressure growing up in a small town, but I didn't mind it because I took commerce and business at university. I liked the space, I liked what my father and uncles did in terms of the community and making a difference in New Brunswick and ultimately in Canada and beyond. It was in my DNA. I like sports too, so those are the two guiding things in my life. But not everybody's like that—my brother happened to be the same, but I have lots of cousins that wanted to do something different and many of them have been very successful. It's to each his own. You have to want to do it. As a parent you'd like to have somebody carry on, but if you force it, it probably won't work.

Oh man, that's a good question. People answer that question probably in different ways. I think the best way to measure how I think I've been successful...

Is to be able to make a judgment on how happy you think your children are and what they're doing. I don't want to get emotional, but I think it's really important that just because they don't do the things that you thought they should, or wanted them to do, or the society felt they should do, that's just not fair to put that pressure on them. So if they find the space that they're really suited to — my oldest daughter Sarah probably isn't in tune with business as my younger ones Jennifer and Jeffrey, but nevertheless the things that she's doing are so meaningful that I'm so proud of all of them and what they're doing. So when I see the next generation, at least in my family which I prefer to talk to because others each have different views — but when I see that my children have gone through life, they've got a good education, they've experienced a lot of things, they've probably visited more countries around the world than I ever did. So I'm envious in some respects, because when I finished school it was two weeks off and get to work. Things have changed a bit. But they've experienced a lot in doing what they've done. Seeing them all now have very wonderful, lovely spouses who I love dearly, and to see them — now two of them have children, so I have three grandchildren, one from one daughter and one from my second daughter. So to see what — I think to judge it is to see that they're happy and they're doing things meaningful, whatever they are, is the greatest gift you can have as a parent.

Well it's interesting, I don't think it's changed my perspective. You know what they say is that when you see your children raise their kids, sometimes you say 'well I wouldn't do it that way, what are you doing, that's not the way you raise those kids.' No, my parents never say that — they never say 'what are you doing, why aren't you disciplining your children.' I don't know, my dad's giving them chocolate after dinner before bedtime. But you know, when they misbehave, the old school was a tap in the butt maybe isn't a bad thing, but no, that's out today, rightly or wrongly. But no, I don't — if my daughters ask me for advice, which they rarely do on parenting, I'll give it to them. But it's not an easy thing — raising kids today is tougher than it was when I grew up. I grew up in a small town, there were no cell phones, very limited TV, it was all outdoor physical activity. So things have changed, parenting's changed, so it's hard for me to be a pro in parenting when things are different today.

No, every parent it's usually a dream to have grandchildren. And people are having less and less children today, so they're not as numerous as in the old days. But nevertheless it's a blessing. And to your point, you can have them for a day or two or for as long as you want and then hand them back. And say 'well that's good, now I need two days rest because they've wore me out.' But you know what, look, it's fun. We do a lot of things, we try to do a lot of things together. We have a family retreat we go to every year down to Jamaica, we have a good week or two with our kids and grandkids. So these are — it's just part of life's journey.

Yeah, that's a good question. I mean, thank you for those comments, I do appreciate it and I'm proud that you've gotten to know them a little bit. It's tough, it's not easy growing up in a fortunate position of having a legacy to help navigate and manage for the rest of your life. Some people would say you're blessed, I would say that's true, but also with that comes responsibility. How we've done it — I think the only advice I would give that I think has worked in my case, doesn't work in everybody, is I think being transparent is a real value. My brother Michael was very instrumental in developing at Maple Leaf 25 years ago this whole notion of daring to be transparent. It's not an easy thing to do for some parents, they think they want to hold their cards close to their vest. I think there's a time and place, but I think transparency with your kids about what you feel the expectations are — not in an overly harsh way — but say, look, when I was growing up I was told you had to go to work at 16, you're going to work in some form of labor. And then as you progress through your summers you're going to work in your summer jobs, it's not 'you're off to school, okay, now get a job.' I think that whole work ethic was instilled early on, but you have to explain why it's important. It's not just 'look, do something,' it's explaining why it's important. Because doing something doesn't have to be in your family business, it could be anything, but doing nothing is not an option. And if you want to work in a small little business on your own and it has success and generates certain financial benefits, that's great. Or if you have bigger aspirations, that's good too. But doing nothing is not an option. So you just have to try to keep talking about it, being transparent, being positive, being supportive and helpful, and sometimes maybe some counseling from other professionals to help the children navigate some of these things. It's all part of it — being a transparent, supportive, and loving parent.

That's a really good question. Philanthropy is like anything — if I want to put it in the business sense, Luke, philanthropy and how to approach it, how to do it properly is like another muscle that you're fine-tuning. Some people know in the business world that you and I live in — let's go to the sports analogy. If you're a sports person, you're a great skater and you're a great passer but you're not physical enough. How can I develop that muscle to be more of a physical player? Philanthropy, I see, is a muscle that needs to be developed early in life. My parents were big on philanthropy and it was important to them, and the legacy that was left to G2 and G3 I think is even more important. So we were schooled quite early on that you have an obligation, you've been fortunate to be in a position to make a difference, and where you do it, what you do it, that's your choice, but doing nothing is not an option.

And it's interesting, there's two ways to go. I call it the IC-focused where you say, I really like — my mother's foundation is on early childhood education, which has been tremendously successful. She's done it for 20 years, I now chair her board, and it's done a huge amount of work in the early years in terms of getting preschool and grades kids in grade school in four, five, and three, four, and five. That was their strategic foundation, strategic thrust. But you can also do what I call the Peanut Butter Fund, where somebody calls up and they need 10 grand or 5 grand for this or the other. It sounds like they're all good, it's just that one has a very large strategic focus and will probably make a huge difference on a larger scale, but the smaller ones are important too. So like you can do the Peanut Butter Fund or you can do the Strategic Fund. Your families think that through. Doing anything is good. It's a muscle that was developed by my parents, and it's a muscle that I think most in my family — and a lot of the McCain family members are doing things you don't even know about. And everyone should respect that because not everybody wants to know, and I understand for good reason. It's got some benefits in that it shows you're doing something, but more importantly, people just want the privacy and do it because they think it's right. And I think that's a good plan.

No, it absolutely is.

It's a great unifying vehicle for sure. And I'm so pleased to hear that you're thinking that way. Families can go different ways. My brother Michael has done a tremendous job in his Daymark Foundation that focuses largely on food security and in those spaces, amongst a few other areas. But they've really spent a lot of time with their spouses and Michael's children in trying to identify what they want to do. It's very strategic and I think, trust me, they're doing some wonderful things and they're going to make a difference. In my case, I went a different route — I decided to do something — because the downside is it's hard to get everybody to agree. There's challenges in getting everybody to agree, and if they agree because it's a group effort as opposed to what their passion is, longer term it's probably tougher. So I've decided to go a little different route. I think giving the individual decision making — I think individual decision making, so they won't have as big an impact collectively because they won't have the capital to do it as a big bang or big splash, but I think if they do things individually and do their own thing, they'll be longer lasting and they'll have more fun. And there's enough things tying our family together, I don't need them to be tied together all the time.

Well, if you develop a process where your family all buys into, then it'll be fine, I'm sure. And as I say, I'm not sure the model that I'm pursuing with my three children is perfect. It's one that we've discussed. My kids like the idea. My kids have so many things they're involved in together, Luke. We have family retreats, we have a holiday together. I just finished the weekend — it's another thing that I think is really important as a parent. I just spent three days — the last three years I've done three days with my three children on a retreat. We went down to Kansas City to watch the Chiefs game. So the time I have just with my three children now that they're adults, and it's adult conversation, and it has its moments as you can imagine. But it's the weekend I look most forward to in the calendar. It's a time we bond a little more, we iron out some family issues, but we have a lot of fun. You know, we're going to a pub together or brewery or football game or a museum or just walking — and hopefully some of those ribs down there. We had a couple barbecues. But anyway, the point is there's so many connection points you can do to try to create unity in your family. Philanthropy doesn't have to be that way, it can be done, and I do believe passions change over time. So it's important they do what they're excited about.

It's a good question. It's an important question, and the thing that the family office does — first of all, they have resources. So in our family office, Luke, we have somebody that really specializes in legal issues — legal issues come up with every person or family, so that's good. We have a person that's really financial, helping us with navigating financial issues, whether it be foundations, financial investments, or whatever. Some expertise to make sure we try to do things right there. So it's a resource that if I had to do it on my own it might not get done, it wouldn't get done as well, and it's just too hard to manage. That's important. But one thing that's really important is — I think I mentioned this earlier — if I have something I really want my kids to understand and maybe I don't explain it as well as I should because I'm not as articulate as I could be, I'll have a good discussion with Jason, who runs our family office. I'll say, 'Jason, this is what I'm thinking we should do with my children, what do you think, am I in la-la land, does this make sense?' And we have a good discussion. And when we finish, I say, 'Good, why don't you sit down and socialize it with them and they will tell you exactly how they feel.' And often times hearing it from an independent body really does make a difference. And if I have a certain direction or tone or strategy and it's supported by Jason and he can put a different spin on it, or Shane or Brad or any of the people in our family office, then it helps the communication and transparency. It just helps it filter down in a meaningful and different way than just 'well, you know, Dad, you're favoring me or you're favoring your brother or sister, where are you coming from?' It's just another voice to help manage situations.

Those are good questions. I will tell you the biggest strength, and I firmly believe this, is that we have the ability to look long term. We really can focus on long term. Now, you can in a public company too, it's — excuse me — it's a little more challenging because you have so much quarter-to-quarter pressure. And some would argue that's a good thing, and I think probably it is. But business quarter-to-quarter is hard to make adjustments and changes if you're not thinking longer term, which public markets don't offer you that opportunity as much. I think that's the biggest benefit. And I think a private family that's owned 100% by the family — or mostly, 90%, whatever high percentage — I think it just has an element of their values. Not that they're different in public and private, because you can do it either way, but I do think there's this sense of pride and ownership that when you're in a family business and you've done it together, it's really something that's quite remarkable and quite unique. And that's what I'm trying to do maybe over at JSM something a little bit on with my own children, just as a side. But I think those are the two major benefits. Other than that, there's a lot of public companies that operate the same way. I know Michael does at Maple Leaf, he does a very good job at trying to look at the long term as opposed to short term. It's just that it's a little more difficult because you get a lot of pressure from the public markets. But those are the big ones. And then the challenge would be on the other side — not everybody wants to be there. You have liquidity challenges. And as good as I'm making this sound, not everybody sees themselves in the family business and they want to exit. And there's the challenges of how do I leave gracefully, and how do I leave gracefully with a very, very fair price — that's judged by the public markets as opposed to what you or I think it should be. So those are the challenges that every private company faces, and if you think through them you find ways to try to mitigate it. Different companies do different things, I won't go into that, but that's the challenge in terms of — and people say, 'look, that's great that you loved it and your father loved it, but I don't love it and I want to do something on my own in a totally different way.' So you have to respect that too.

Well, I think that's another good question. I think that the federal government doesn't really fully appreciate and understand the role the family business plays in this country. I'm disappointed that I don't think our friends in Ottawa fully — they may say they do, I don't believe they do. They changed some tax rules lately which I think have been a big challenge for family enterprises. I think governments could do a better job in recognizing the important role that private and public families do for this country. What can they do differently — there's lots of people smarter than I am that would probably provide a lot of good advice, I won't go into that, we don't have time. But I think family businesses are the backbone and fabric of this country. I spend a lot of time in my hockey business — we had the CHL owners from all across Canada a month ago gather in Toronto. There are teams from Prince Albert all the way to Bathurst, New Brunswick, and everywhere in between, 60 teams. These teams are all in little pockets of communities. Many of them are in large centres, but a lot of them are in smaller places — Swift Current, Red Deer, Baie-Comeau, Rouyn-Noranda — all these different areas across Canada. And when you meet them, a lot of them are owned by small businesses or family businesses or community leaders that think hockey makes a difference. Well, family business, hockey, the sport — they get ingrained in the fabric of your community, of your country, of your province. And I think they play a much bigger role than just the financial numbers. So I'm a big fan of family businesses and private enterprise, because I think it's important to our country.

Thank you, Luke.