Over the years, the Tracy family has worked hard to create a strong governance structure for their core business, and they likewise put a lot of thought into how the family office would be governed. When the owners of food industry redistribution company Dot Foods decided to expand their investments, they created Dot Family Holdings, the family office that is the holding company for Dot Foods and four other businesses.
One of the first questions the family needed to answer: Should the board remain at the level of the core business, or should it be at the holding company level? They chose to put the board in charge of the holding company.
But that raised more questions, says Joe Tracy, a second-generation family member who is CEO of Dot Family Holdings: “If it’s at the holding company level, how are we going to develop the leadership skills of the family to not only manage the core business but also these other businesses that today we don’t know as much about?”
The family has long included independent directors on its board.
“We’ve had outside directors on our board for almost 25 years, and we didn’t change that when we moved the board from the core business to the parent company post-reorganization,” Tracy says. “We have family members that are running the business on the board, plus some family members that are not in the business day-to-day who are on the board. We have very formal terms for family members and the four outside directors as well.”
The family has also created ways for members of the rising generation build their skills so they will be able to be productive board members in the future.
“We recently finished planning for the transition of the leadership of the board from G2 leadership to G3,” Tracy says. “We have observer seats on our board to expose G3 to governance and gain experience. Then they will go on the board of an outside company that we own for two years. After that they will be eligible to serve on the parent company board long-term. We’re going to add our first two G3s to the parent company board in 2025.”
The governance structures the family has adopted are not only critical for managing their businesses — they also increase family cohesion.
“We invest significantly in governance,” Tracy says. “We work hard to keep family members connected to the business, by having them serve on an investment committee, serve on one of the boards, on the family council, or on the foundation board.”
For more on Dot Family Holdings, see our story from last month.
