Navigating Shareholder Dynamics:

Relationships, Policies and Process

Mary Vermeer Andringa, Vermeer Corporation

Preston Root, Root Family Corporation

Todd Litzsinger, Follett Corporation

Jill Shipley, Abbot Downing

Follett History

Then - Now

#1 Content Distributor in PreK-12 &

Higher Education

SchoolsNumber of

130k

in North America

80k

SchoolsNumber of

Follett is in

1,200+

Number of

Studentswe reach through these stores

45M

Number of

Retail Stores2009 to present

MANAGE RESOURCES FEED AND FUEL IMPROVING INFRASTRUCTURE

Vermeer is a family-owned

and operated agricultural

and industrial equipment

manufacturer making a

real impact in a

progressing world,

committed to helping

others be EQUIPPED TO

DO MORE®

Harry Vermeer Gary Vermeer

Root Family History

Root Family History

Challenge

What was the challenge your

family faced and the key

dynamics involved?

Follett Challenge

Board - Refresh

Board Refresh:

#1 – Cohesive Approach (Ownership / Board)

#2 – Shareholder Value

Compounding Dynamics:

#1 – Family Control

#2 – Ownership Reality

#3 – Board Size / Makeup

• A family that was historically close, became historically distant; for the

next 35 years, there was minimal contact between the two branches, and

ownership of Vermeer was handled very differently by the two families

• Gary Vermeer family shareholders groomed to work in the company and

engage in ownership decisions

• Harry Vermeer family shareholders groomed to be silent owners –

supportive and grateful to hold stock but given little opportunity to

participate, beyond one seat on the Board of Directors filled by a G1 or

G2

Vermeer Challenge:

The Harsh & Distant Reality1974 – 2009

Two Branches…

…Becoming “One” Vermeer© Family Business Network-North America

Root Family Challenges

• In rapidly expanding families and their businesses, attempting to initiate predictable process for resolving conflict

• Becoming more responsible and agile in highly emotional issues; sometimes unspoken

• Perpetual consensus adds tension to complex emotional issues

Solution & Impact

What was the solution your

family implemented to deal

with the challenge and what

was the resulting impact?

Follett Solution & Impact

• Follett Family Ownership Group (FFOG)

• Ownership Breakout

• Vote

• Family/Ownership Voice

Vermeer Shareholder Relations

Development2009

• Ownership Council task force established

2010• First annual Vermeer family camp

• Quarterly Vermeer family communicator & shareholder handbook

2011• Established Ownership Council

2012• Buy/sell agreement development

• Family employment policy task force & shareholder director policy

2013• Updated family employment policy

• Buy/sell agreement

2014• Family office task force & review-renew-refocus

• Living out healthy family business governance

2015• Implemented first Vermeer family 5-year strategy planning process

• Transitions of Chair to Chair Emeritus and CEO to Chair/CEO

Vermeer Family Governance Map

Vermeer Ownership Council

• Structure– Annual shareholder meetings to elect board members (6

independent directors, 5 family directors, 4 next-generation family

observers)

– Shareholder learning forums – webcasts, dinner forums, executive

team presentations, product demonstrations

– Family camp – long weekend held annually

• Plan– Established Ownership Council to address key shareholder issues

such as buy/sell, estate planning, family governance and objective

setting

– Evaluating family office for all shareholders (could include tax

preparation, insurance negotiations, career testing for direct

descendants and married-ins)

Root Family Solutions & Impact

• Practical and diplomatic team to advocate for all parties

• How to introduce areas of concern for all parties

• Advocacy implies cooperation

• Small even-numbered team implies harmony

Root Family Team Members

prestonroot.com

• Family and non-family are both useful

• Diplomatic yet practical

• Highly engaged listening skills

• Connected to family and business

• Always present

• Family services staff ideal candidate

Lessons Learned

Follett Lessons Learned

• Involvement / Engagement

• Branch Communication

• It works for now…

Vermeer Lessons Learned

• Rebuild trust through relationship – never underestimate

the power of one-to-one interactions; take time to listen and

talk to each other; offer support and seek to understand

• Treat

– Business like a business

– Family like a family

– Ownership with respect

Business First, Family Always

Root Lessons Learned

• Contentious and dangerous issues changed

from dangerous and uncomfortable to

manageable

• Success on 2 or 3 major issues will validate

advocacy concept

prestonroot.com

Root Family

Family Soccer Game

PRACTICALEXAMPLES

Family Education

Philanthropy

Shareholder Relations

Accounts Receivable

Family Gatherings

Root Family

“THIS COULD GET COMPLICATED”

Summary

• There is not one “right way”

• Conflict is normal

• Direct, open and honest communication is critical

• Formal governance helps – find the right solution

for you

• Do not underestimate the power of having fun

together