Daniel Alexander Skwarna/The Globe and Mail
CEO transitions don’t get much bigger than the one facing Maple Leaf Foods. After two and a half decades of unquiet leadership, Michael McCain, now 64, is as much a part of his company’s identity as its bacon. Since his father, Wallace, bought the then-underperforming meat packer in 1995, McCain has guided it through crisis and pushed it toward innovation, turning Maple Leaf into Canada’s largest and arguably most forward-thinking meat producer. This spring, marking not just a leadership shift but a generational one, he’ll hand responsibility for the company he remade to 47-year-old Curtis Frank, whom McCain has observed and mentored since he joined as a management trainee more than two decades ago. If Frank is daunted by the task before him, at least he knows his predecessor won’t be far away. With his family’s large ownership stake, McCain will be in the chair’s seat, making this a transition that could unfold, and be fascinating to watch, for years.
Michael, why is this the right time to go?
MM: I’m not getting any younger. I’ve been in the current role for 24 years. (1) Curtis has been in the company for over 22. He’s incredibly capable and ready to take the helm, and I have a more diverse set of interests today that I want to explore.
Back in 1996, this magazine described your father’s vision for the company this way: Maple Leaf Foods would be “recreated in the McCain Foods mould—lean, mean and capable of producing enormous profits.” Has that vision been achieved?
MM: We had more obstacles than probably we expected. (2) But I think today, we’ve built an organization that has had a much more inspiring, impactful, purposeful journey, in addition to financial success.
When did you decide Curtis was the right person to step into your shoes?
MM: Curtis has been a talented executive for decades. As the board and I began the dialogue of succession five or 10 years ago, obviously Curtis was on the radar screen. He demonstrated long-term success in virtually everything he touched. He had extraordinary followership throughout the organization. He embodied all the leadership values we cherish, and a track record of accountability and delivering results. So, the board and I positioned him as the COO in 2018, and Curtis and I have been very planfully running the business in a two-in-the-box model since then, working together intimately.
Curtis, what do you love about the food business?
CF: I was raised in a small farming community in Saskatchewan, on a mixed family farm. The food business is in my blood. I grew up raising cattle, pigs, chickens, planting and harvesting crops, growing food, eating the proceeds of a family farm, operating machinery. So, I love that it’s consistent with the way I grew up, my personal values. It’s a wonderful business full of great people.
MM: Trevor, an interesting side note is when I introduced Curtis to my 88-year-old mother, I said, “Mom, meet Curtis Frank. He’s gonna be taking over from me, very soon. He’s the only guy you’ve met that comes from a town smaller than Florenceville, N.B.” She said, “That must mean he’s good people, then, Michael.”
Curtis, you’re taking over from a forceful leader with a strong personality. How do you establish authority?
CF: Yeah, Michael’s got a strong voice, and that permeates outside of our organization, in society. And there’s a comfort level in the organization with his leadership. So, it’s big shoes to fill. But I have plans to pave my own path. I think what’s really important is the chemistry I have with Michael, his family, and the people broadly within the organization. I think there are benefits with growing up inside the organization, the relationships that I’ve forged.
What’s your main strength?
CF: I think I’m a good listener. I’m introspective. I think I have the humility that’s required to take on a role like this. At the same time, I think I’m decisive enough to know the actions that need to be taken to lead our company.
Can you name one thing that will be different with you as CEO?
CF: We’re headed to a different place as an organization. Much of the company’s history has been dedicated to fixing our business and investing in our supply chains. It started with our pork business and the investments we made in Brandon, Man. (3) That was followed by seven years of transforming our prepared meats business, where we invested $1 billion into strengthening our brands and the efficiencies in our network. And we’re building a $770-million poultry facility. (4) Now we’re transitioning from fixing a business to growing it. That will be the path forward—growing inside the Canadian market and exploring growth into the United States. I expect acquisitions will play a larger role in our future.
Michael, when Archie McLean stepped down as CEO in 1998, he said, “Too many cooks spoil the broth.” You’ll be in the chair’s seat, probably next to Curtis, maybe whispering in his ear. When does guidance become interference?
MM: That’s a really important question. On one hand, my family has an ownership position of 40%, (5) and we expect to continue that ownership position through at least the next generation. A level of engagement in the business, when you have the ownership concentration that we have, is to be expected. Having said that, the engagement we demonstrate cannot undermine the leadership capacity of the chief executive officer. To that end, Curtis and I have been very deliberate. We co-authored a job description that articulated what I would be engaged in and what I wouldn’t be engaged in. But we’ve spent more time actually talking about what won’t be written in the job description, because the day the mantle is transitioned, it’s most important that both of us show up differently. For the past 25-plus years, I’ve shown up as the leader of the organization, and there are leadership behaviours that are attached to that. Those leadership behaviours have to basically cease. We’ve had candid, detailed, trusting conversations about how I will show up in a supportive way that is not the leader of the organization, and how Curtis will fill that vacuum.
Can you give me an example of a leadership behaviour you won’t be exhibiting?
MM: Oh, totally. If I’m in a meeting, I have no intention of generating conflict among the leadership team. You know, as the CEO, you are, in some cases, the chief tensioner, holding people accountable. It’s not my job to hold people accountable on a team anymore. That’s Curtis’s job. I’ll speak when I’m spoken to. I’ll answer when I’m asked. It’s gonna be challenging, but I’m very mindful that that is essential to supporting him as the new leader.
How are you going to bite your tongue when there’s a moment crying out for what you perceive as your voice?
MM: I’ll give you a practical example. I’m very proud of the fact that my partner and I raised five amazing children. I think we were pretty good parents. In the past few years, I’ve been blessed with six grandchildren. I’ve learned, as a grandparent, that you have to bite your tongue until it bleeds. You give advice in a mentoring way, when you’re asked for it, and that is the transition that almost has to occur here. I am very comfortable with the fact that Curtis, in his role, will do many things differently than me. I am not here to micromanage, to be a shadow boss, to pretend like I’m the CEO. It’s not an easy transition, but it’s one that I think we’ve explored enough that we’re both comfortable that we have very high probability of success.
Curtis, you alluded earlier to Michael having a voice that extends beyond the company. An example was his Twitter attack on Donald Trump. Do you plan on speaking out?
CF: On the topics that are important to me on a personal level and important to the company, I will, without question, have a voice. You brought up the Trump tweet. (6) The conversations Michael and I often have are around the line between speaking on behalf of oneself versus the company. And there’s no bright line, as you can imagine, particularly with someone as established and experienced as Michael is.
Do corporate leaders have an obligation to speak out on societal issues like the attacks on democracy, the rise of populism, threats to economic stability?
MM: I have a particularly strong point of view on this, Trevor. I think the answer to that is unequivocally yes, for a number of reasons. The first is that, as an organization, we believe deeply in the ethos of shared value—creating value for all the stakeholders in balance, specifically rejecting the primacy of shareholders over the other stakeholders in the enterprise. I think that alone gives us licence to speak on behalf of other stakeholders, including interests of the community or interests that affect the environment. And evidence suggests that corporate leaders today, in many cases, are actually among the more trusted voices in our society. Finally, we, as leaders, are expected to represent the voice of the communities who work inside the organization, and they are interested in many of these topics. You referenced the tweet of a few years ago. The licence to speak in that moment was underpinned by the fact that we had a colleague whose family was lost by the behaviour at the time. And our organization expected me, in that moment, to have a point of view. Corporate leaders need to express points of view that reflect broader society and not just the narrow interests of the corporation.
CF: I wholeheartedly agree. There’s a vulnerability, naturally, that comes with expressing views that might be outside the direct lane of any enterprise or organization. I think the greatest leaders have the courage to see past that vulnerability and use their voice to make change.
Let’s shift focus to the business. Curtis, what’s the biggest challenge facing Canada’s meat industry?
CF: There’s lots of disruption happening in the industry today. It spans from the post-pandemic economy to the implications of the war in Ukraine, to the emergence of new technologies, and maybe things like cellular agriculture, cellular meats, plant protein. For certain, our short-term results have been impacted by all those variables. But the underlying health of our business, the strength of our brands, the quality of our people, gives me just great confidence that we’ll emerge from those challenges in a very good place.
What is the state of the supply chain right now?
CF: Our short-term results have definitely been impacted by disruptions in the supply chains. We’re very, very challenged here. We see that show up in labour. We reported at the end of last quarter that we had peaked out at as many as 1,600 vacancies in the company. We got that down to approximately 1,100, which is still very significant in our operations. When you combine that with an incoming supply chain that’s been disrupted in a material way, from things like the war in Ukraine, things like the agricultural disruption that’s happened with feed grains and fertilizers and the like, it’s been a really, really challenging environment. We’re confident that these things will normalize over time.
Michael, the company’s stock has been on a downward trend since the start of 2018. This year alone, it’s down 38%. What’s behind that decline?
MM: Fundamentally, there have been two drivers, I think, that have caused our share price not to reflect the progress of the business. The first is that we’ve invested $770 million in a poultry facility in London. An organic investment like that requires five years of construction, maybe one to two years where your actual earnings go down while you start up the facility. Most capital markets don’t love large-scale capital investments like that. Contrast that to an acquisition that comes with immediate earnings and an immediate news feed; those are very attractive to short-termism. The second driver, probably even more acute, is that the capital markets have not loved our investment in plant-based protein. Some shareholders are revenue-growth investors. Ours are cashflow investors, and they didn’t love it.
Curtis, what went wrong with plant-based protein?
CF: The consumer’s needs were not met. They weren’t met on taste and, to a lesser degree, health. A lot of learning came out of the consumer experience. Looking back, I wouldn’t have necessarily done anything different. I think we invested at an appropriate time, and we also pivoted at an appropriate time to restructure our business, to align with the category opportunity. Instead of a business we thought would grow at 30% a year into perpetuity, we now think it’s going to grow by 10% to 12% into perpetuity, once things kind of normalize. (7)
MM: I would draw a distinction between taking a well-calculated risk that may or may not work out and a mistake. I am quite energized by the long-term future of plant-based protein as part of our category portfolio, but it’ll be a different future than what we imagined three years ago.
Does the recalculation around plant-based protein affect your long-term goals for sustainability?
MM: Not even in the least. And the reason is because we never invested in plant-based protein because it was, or is, a more sustainable option. Sustainability, for us, is about fixing the footprint of our meat business, not about diversifying away from it. If you look at our footprint today, of all the emissions across our full supply chain, only two of them really matter. The first is feed grains—mostly fertilizer emissions around those feed grains—and the second is manure. We need a technology shift in both of those two large emission pools to achieve our goals. In the case of feed grains, we are heavily investing in regenerative agriculture, which can be a problem-solver in its capacity to sequester carbon. In the case of manure, we are in the advanced stages of business-case development around a technology called anaerobic digestion, which has the capacity to take methane from that manure and convert it into a renewable energy source.
Michael, you said recently that “a good recession is our friend at Maple Leaf Foods.” How so?
MM: In strong economies or weak economies, our demand signal doesn’t change that much. People eat in very similar and habitual patterns. I think in a recessionary environment, the supply chain challenges that Curtis described earlier are typically alleviated in that environment. We have an easier go of hiring people. Typically, we don’t have the supply chain challenges in a weaker economy that we do in a robust economy.
If recession is a friend, is inflation friend or foe?
MM: It’s certainly been foe so far this year. We’ve been three quarters in a row of being behind the curve, where we think we’ve priced enough, only to discover that there’s a new round just around the corner.
CF: Keeping up with the pace of inflation has been incredibly difficult. I think it would be fair to expect, in a bit of a downturn, some stability from an inflationary point of view, as well.
Michael, looking back over the years that you’ve been in charge at Maple Leaf Foods, what’s your proudest moment?
MM: I’d highlight two. The first is the day that we announced we were the first large-scale food company in the world to be carbon neutral. (8) The second is today—it gives me great pride to sit beside Curtis Frank as the next chief executive officer. I remember when he joined the organization as a salesperson in Calgary, 22-plus years ago. And this young man who started as a salesperson, with his agricultural roots in the Prairies, has developed into an extraordinarily competent, engaged, smart, effective leader who undoubtedly will do this job better than I have over the past 25 years.
Curtis, someone in your public relations department wrote that Maple Leaf has “a change-the-world vision, which is reflected in its future CEO, Curtis Frank.” What do you want to change about the world?
CF: As the transition comes closer, my mind has been centred on what I’m going to do to make sure Maple Leaf Foods is a company that survives and thrives 100 years from now. I can tell you that in the last 22 years working inside of this company, I haven’t thought that way. But the enormity of this moment makes it impossible not to. My sole focus is on continuing Michael’s legacy, and having the courage to think big, to explore and embrace new technologies, meet the challenges we’ll face in the food sector, and advance our collective vision here—to become the most sustainable protein company on Earth.
1. McCain joined the company as president and chief operating officer in 1995. He was appointed CEO in January 1999.
2. The company’s obstacles have included: a battle with unions that shut down four plants in 1997; the forced overhaul of its business in 2006, including the elimination of five plants, when a rapidly appreciating Canadian dollar erased its pork margins; and most notably, the 2008 listeriosis crisis that saw contaminated meat from Maple Leaf Foods kill 22 people.
3. Maple Leaf built a huge $112-million pork factory in Brandon, Man., in 1997.
4. In 2019, the company began construction of a $770-million state-of-the-art poultry-producing factory in London, Ont., scheduled to begin operations in 2023.
5. The actual ownership portion for the McCain family, according to the company’s information circular, is 39%.
6. In 2020, Iran downed Ukrainian International Airlines Flight 752, killing all 176 people on board, including the wife and son of a Maple Leaf employee. McCain posted a tweet calling the tragedy “collateral damage” of the behaviour of Donald Trump, whom he called the “narcissist in Washington.”
7. According to the federal government, total global protein demand will double to 943.5 million tonnes by 2054. It expects the market for alternative proteins, including plant-based proteins, to grow 14% annually until 2024 and eventually comprise a third of the protein market.
8. In November 2019, Maple Leaf announced it had purchased offsets for emissions from 10 environmental projects in North America, enough to offset some 440,000 tonnes of carbon and make the company officially carbon neutral.
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