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Case Studies

Decades of Insight Distilled into a Defense of Dual Class Companies

When public companies need specialized securities counsel, they typically turn to high-powered financial center firms with large public securities practices and close SEC connections. But when Brown-Forman (NYSE: BF-B), a publicly-traded manufacturer of wine and spirits (their flagship product is Jack Daniel’s) needed prompt assistance with a sensitive securities issue, it turned to Bodman.

Why Bodman? Brown-Forman is a dual class company, a form of ownership in which a particular class of shareholder (such as family owners) holds a disproportionate share of the voting clout. While dual class structures sometimes draw criticism from other investors, they serve to protect the family owners’ interest in the company’s long-term success, providing stability in the face of market pressure to achieve short-term gains, which ultimately benefits holders of all share classes.

Brown-Forman was well aware of Bodman’s pedigree in advising family owners of publicly traded businesses, including Ford Motor Company (NYSE: F) and Kelly Services (NASDAQ: KELYA). So, when the company’s general counsel needed to prepare, on an urgent basis, a letter in opposition to a proposal from the Institutional Shareholder Services Group (ISS) that would adversely affect companies with dual class share structures, he contacted us.

Time was short but the Bodman team jumped into action, preparing, with 48 hours, a compelling letter in opposition to the ISS proposal.  The letter we prepared, which staunchly defends the benefits of dual class share structures, was not only enthusiastically endorsed by Brown-Forman, but was also signed off on by dozens of other in-house counsel from dual class public companies including Ford Motor Company, Steelcase Inc., Hamilton Beach Brands Holding Company, A. O. Smith Corporation, Constellation Brands, Inc., and Republic Bank & Trust Company, among many others.

“It’s extraordinarily unusual for a general counsel of an out-of-state public company, a well-known name brand in a major industry, to hire a mid-size Michigan law firm to write a comment letter on their status as a dual class company,” Bodman’s David Larsen said. “That we could produce such high quality work on short notice speaks to our experience, our agility, our client focus, and the quality of our people.”

Hats off to the Bodman team which included Larsen, Carrie Leahy, Frank Manley, and Albert Pak.