The prospect of Magna International without Frank Stronach at the helm is almost unthinkable. And yet, after the annual meeting in May, Stronach stepped down as chairman of the company he started as a small tool and die shop in Toronto in 1957-one he turned into a global powerhouse with the heft to be taken seriously when it bid for Chrysler in 2007 and GM's Opel division in 2009. As with much of his storied career, there was controversy in the 78-year-old's final act-an expensive buyout of his multiple voting shares that gave him the equivalent of $863 million (U.S.). He will stay on as honorary chairman and plans to invest in such diverse ventures as horse racing tracks, electric vehicles, organic beef and health care.
Why are you leaving now? I came to the conclusion that it would be nearly impossible to pass it on, to hand it on. If I hadn't been around, Belinda would have been first in line, then my grandson, so I said maybe I should get out. I've still got 1,000 ideas, and I feel so constrained. For every tiny little thing [to get approved] it's an enormous waste of energy. We're killing entrepreneurship.
You had many battles with institutional shareholders. I hear over and over from shareholders-especially pension fund institutions-"Stronach makes so much." But none of them ever says that I gave up 20% of my equity when I offered that to shareholders [in 1978]for the multiple vote. I think pension funds have the worst corporate governance. Their shareholders have absolutely no say who's on the board. They have no say where their money is invested.
What will Magna look like without you? I think most of the guys were a long time with me, and I think my philosophy has rooted itself. If they don't stray away from that, then they should do well. The corporate constitution is the basis for Magna's success. The one thing I feel sorry about is that I didn't put in earlier that the constitution can only be changed if the workers agree to it. If the constitution were to be changed, I believe it would trigger a legal avalanche.
What stands out as something you regret? I don't regret anything, for the simple reason that everything I did was proper. I never broke a rule.
What did you learn from the crisis of 1989-1990, when Magna almost went bankrupt? I believe in 1990 we had $1.2 billion in debt. Books will show that in '93 we paid back the last debt and I swore to myself from then on I would never take on debt any more. Everybody wanted to take a slice. You had the vultures that wanted to take over Magna. That was a very trying time. It was the worst thing I ever experienced. I could see a great future, but I knew financially we were not disciplined. So my message to businesses is to stay with the budgeting process. You must have a good system so you won't spend more money than what's coming in.
What are the highlights? When I look back, the jobs I've created, the entrepreneurs I've created-many of them made multimillions. It is maybe to set an example for what you could do, what people are capable of doing. We've got about 100,000 employees now.
Why are you going to invest in these new businesses? I'm physically in great shape. There's no question in my mind I'm smarter than I was 50 years ago, I'm smarter than I was 30 years ago and I think I'm smarter than I was five years ago. Hopefully I can create some more role models.
How far along is the electric vehicle venture? We're quite advanced. We built a car where we made all the components. There's very few companies that will understand the total complexity of an electric car. We have manufactured, we have built all the critical components-the electric motor, the gearbox, the inverter, the charger, the battery.
Have you thought about slowing down? You slow down when you're confined in a box and you can't move. It's as simple as that.Report Typo/Error