Family Fortunes Oetker Changes Recipe For Success

The Oetker Group has managed to overcome family division with the help of outsiders.
Squabbling families sometimes need outside help.

 

It’s the perfect mix to cripple a business. Take a group of family members, each with equal stakes in the company. Add a history of divorce, jealousy and unresolved Nazi ties. Then top it off with dissent over strategy and jobs.

All those ingredients are part of the Oetker clan’s business in foods, shipping and the private bank, Bankhaus Lampe. Last year was an especially fraught one for family ties. 

Because of a generational dispute among the eight heirs, the Oetker Group had to cancel merger talks with the Hapag-Lloyd shipping company. The planned acquisition would have strengthened the family-owned line from Southern Hamburg – had the three youngest Oetker heirs not blocked the deal.

The eldest of the three siblings –  from the third marriage of deceased patriarch Rudolf-August Oetker – was probably behind it. The 47-year-old Alfred Oetker believed he should be the one to lead company operations. That’s what his late father wanted, he claimed.

His half-brother and family spokesman, 70-year-old August Oetker, saw it differently. He prevented Alfred Oetker’s ambitions from being fulfilled. He also objected to a study commissioned by the company to look into the patriarch’s dealings with Nazis during World War II.

The Oetker case shows how important an advisory board with experienced managers can be for a family business.

Despite the infighting, the family agreed to a compromise this week. Alfred Oetker will become vice chairman of the important advisory board, which decides all substantial strategy issues for the company. In return, he will have to waive his claim to lead operations.

So for now the family fight is on hold. The eight heirs met before a secret arbitration court at the advice of their lawyers, as unpleasant details from their family life surfaced in the media. Non-family members from the Oetker Group’s advisory board were vital in settling the conflict.

The Oetker case shows how important an advisory board with experienced managers can be for a family business. External, non-family professionals should form the core of leadership and governance. That also applies to companies that only have a handful of shareholders.

The Oetkers did well to call upon strong advisory boards to help mediate matters including: Carsten Spohr, the head of Lufthansa; Hans-Otto Schrader, chief executive of Otto; and until 2014, Ulrich Lehner, the former head of Henkel and a multiple-advisory board member.

These executives lobbied for an agreement behind the scenes. The arbitration court, with its high-ranking lawyers, may have been decisive in working out a compromise in the end. 

Oetker Gruppe WTB-01



However, despite their differences, the family had a common goal – that of leading a stable group, despite its diverse combination of food, shipping, banking and hotels.

The Oetkers operate under the maxim, “Don’t put all your eggs in one basket,” and assets from the various sectors are held by the group as a whole. Tat underlying concept won out during the debate over shipping strategy. Because freight rates were ruinous, more investment in that area became unattractive to all.

But good corporate governance and shared values are not enough. There also must be a way out. An example is Arend Oetker, who broke off from the family empire decades ago and now owns Schwartau foods.

Peace in the Oetker company will also be dependent on the external manager who will replace operations-head Richard Oetker in two years. He will need to have united shareholders, or he will sink into the depths of the family dramas.  

 

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