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THE MIAMI HERALD
Bacardi Schism Revealed In Vote
BY ELAINE WALKER
June 27, 2003
Bacardi Ltd.'s board of directors got a makeover Thursday in what may be the first public sign of a growing schism within the family.
At the company's annual meeting in San Juan, Puerto Rico, shareholders agreed to elect three outsiders for the first time in Bacardi's 141-year history.
But even more controversial was the overall makeup of the new 16-member board, which includes no members of the dissident minority that has voiced opposition about the possibility of a future public offering.
Bacardi has been slowly moving in that direction, with the majority of shareholders agreeing in May to allow the issuance of new shares beyond the 23.5 million currently held by about 600 family members.
As the spirits industry continues to consolidate, the idea is that Bacardi will need access to the public markets in order to expand its portfolio and keep up with industry juggernaut Diageo Plc.
But the four nominees not elected Thursday were among an increasingly vocal group of minority shareholders questioning the need to break with tradition and relinquish control of the company that has been family-owned since its founding in Santiago de Cuba in 1862. While the minority shareholders may be large in number, they control only a small portion of the Bacardi shares.
Not elected to the board of directors were J. Alberto Bacardi, Joaquin E. Bacardi Sr., Toten D. Bacardi and Mario Luis Del Valle. All were board members last year except Toten Bacardi, who served as an alternate director.
Some shareholders say the election of the new board also violates a gentlemen's agreement that divided board representation among each of the major branches of the Bacardi family. Certain branches of the family are unrepresented on the new board.
''This is a big break with tradition,'' said Roberto del Rosal, a Bacardi shareholder and former president of the Puerto Rico operating company. ``It's a brand-new world at Bacardi.
``If anything this is going to unite a very loose group of people. We now know where we stand. We're going to become a true minority and true opposition, demanding minority shareholder rights and full disclosure.''
Bacardi Chairman Ruben Rodríguez was unavailable Thursday to comment on the election. The idea to add outsiders to the Bacardi board has been part of a continuing effort by Rodríguez, who stepped down Thursday as chief executive, to improve the corporate governance of the family-owned company.
The three new outside directors: Andreas Gembler, retired president and chief executive of Philip Morris International; Guy Peyrelongue, former president and chief executive of L'Oréal USA and chairman of L'Oréal Canada; and Ray Silcock, executive vice president and chief financial officer of Cott Corp.
''These highly accomplished individuals will bring unique insight and experience to Bacardi's board of directors,'' Rodríguez said in a written statement. ``They are each distinguished and experienced business leaders who will offer invaluable advice and counsel.''