Bouchard sees solution to controversy over Couche-Tard control

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Alimentation Couche-Tard Inc. executive chairman Alain Bouchard says there might be a way to settle the controversy over the issue of the founders' control of the convenience-store chain.

"I've been told that it's possible by going at it another way," Mr. Bouchard said Tuesday after the annual meeting of shareholders.

The issue of maintaining control of Couche-Tard through super-voting shares erupted into the open earlier this year when Mr. Bouchard expressed frustration at what he said was opposition on the part of some Bay Street institutional investors to the extension of the founders' grip on the company.

A so-called sunset clause – put in place in 1995 when the founders were in their 30s and 40s – stipulates that their voting rights end when the youngest of them turns 65 or dies. Couche-Tard proposed that the automatic termination of the dual-class share structure be nixed.

If the sunset clause remains in place, the founders – who control the company through their Class A shares despite owning just 23 per cent of the equity – are set to lose their grip on Couche-Tard in five years.

A number of shareholders voiced concerns last fall about the renewal plan; it was pulled before it went to a vote after Couche-Tard concluded it did not have the two-thirds support needed from its Class B subordinate shareholders.

Mr. Bouchard said on Tuesday he has previously only discussed the matter with institutional shareholders and not with the proxy advisory firms who provide them with advice on corporate governance matters.

Talking directly with the proxy firms might provide an avenue to finding a solution to the problem, he said, referring to one firm in particular: Institutional Shareholder Services.

ISS and another firm, Glass Lewis & Co. last year recommended that shareholders vote against the plan to renew control through dual-class shares.

Earlier this year, Mr. Bouchard told media outlets that failure to maintain the sunset clause in place could result in the company being sold.

Quebec lawmakers vowed to support the retail chain's founders and work with them to keep head office in the province.

Mutual fund giant Fidelity Investments is among the big investors opposed to the proposal to maintain the founders' control, sources have told The Globe and Mail.

But founders' control is not the main issue for Fidelity, according to sources.

The fund manager is more concerned over the passing of the control stake to the founders' children, who might not be able to provide the same stellar shareholder returns of the founding partners, the sources said.

Earlier, Mr. Bouchard ran into flak when an irate shareholder complained about the chief executive officer's lack of French-language skills.

"I find this somewhat insulting," Yvon Gagnon told Mr. Bouchard, saying the founder and chairman promised two years ago – when he handed over the CEO title to Iowa-born Brian Hannasch – that Mr. Hannasch would learn to speak French.

"You gave your word," Mr. Gagnon said after shareholders re-elected the 11 members of the Board, including Mr. Hannasch.

"I steered him in another direction," Mr. Bouchard replied.

"We worked on expanding the company. There wasn't any time" for French lessons.

Mr. Hannasch's lack of familiarity with French has been raised in the past by critics and shareholders of the homegrown Quebec corporate champion, whose four founding shareholders are francophone.

Couche-Tard has become a major convenience store player in the U.S.

But the annual meeting – usually taking place in Laval – is still conducted mostly in French.