Canadian family-controlled public companies sustainably outperform their widely-held peers

Montreal, September 10, 2018

National Bank of Canada unveils the 2018 edition of The Family Advantage report —
a survey of key success drivers behind family-owned businesses

Released today, the 2018 Family Advantage report features a new NBC Canadian Family Index calculated by S&P Dow Jones Indices which tracks and measures the performance of Canadian family-controlled public companies relative to the S&P/TSX Composite Index. The report clearly demonstrates family-controlled companies’ sustainable capacity to create value over the long run for their shareholders. Over the past 13 years, the NBC Canadian Family Total Return Index registered an annualized return of 9.0% compared to 6.7% for the S&P/TSX Composite Total Return Index. The Family Advantage report helps gain deeper understanding of the inherent advantages of family-owned companies through an analysis of 43 family-controlled Canadian businesses.[1]

Beyond the numbers, in the scope of this research, in-depth interviews were conducted with several leaders of Canadian family businesses to help identify the key factors explaining their outperformance. Some key advantages include a focus on sustainable long-term profitability versus short-term results and a strong corporate culture driven by family values. Corporate culture also underpins the superior performance of family companies. It includes intangibles such as the values of the founders: entrepreneurship, vision, work ethic, commitment to the communities in which they are involved, personal relationships with stakeholders across the value chain, loyalty and concern for reputation. Preserving the uniqueness of their culture, for instance by avoiding a one-size-fits-all governance model, is also highlighted as a key success factor. In their words:

  • Maureen Sabia, Chairman of the Board of Canadian Tire, says: “I do not believe there is an ideal governance model as each company has its unique structure and challenges. I believe that shareholder activism should be replaced with director activism as the better means of addressing the concerns of shareholders. I do not believe that we need more intervention by regulators or governance gurus.”
  • Andrew T. Molson, Director of Molson Coors, sees great value in separating board functions from management functions: “We believe in strong governance and in strong external management. The last thing we want is to be perceived as an impediment to the executive team’s ability to build on Molson Coors’s rich legacy and to deliver on long-term strategic objectives.”
  • Serge Godin, Executive Chairman and Founder of the CGI Group, believes that family control shields management from undue short-term pressures: “Without multiple voting shares, CGI would have been sold at least 10 times and our head office would no longer be Canadian-based.” He adds: “The main advantage of family-controlled firms is their capacity to enable management to implement long term strategic objectives.”

Vincent Joli-Coeur, Vice-Chairman of National Bank of Canada, Financial Markets concludes: “The long-term outperformance of Canada’s leading family-controlled companies has again been validated. The NBC Canadian Family Total Return Index calculated by S&P Dow Jones Indices has beaten the S&P TSX Composite Total Return by 73% since 2005. Canadian family business leaders’ clear alignment of incentives and unwavering commitment to long-term success have led their businesses to develop competitive advantages over the long run in today’s fast-changing business environment.”

[1] Based on the June 2017 Index Annual Review

About the 2018 Family Advantage report
The 2018 Family Advantage report expands on the inaugural 2015 report. It introduces a new NBC Canadian Family Index calculated by S&P Dow Jones Indices, which tracks and measures the performance of Canadian family-controlled companies relative to the S&P/TSX Composite Index, the headline index for the Canadian equity market. The Index includes 43 Canadian family-controlled businesses across different industries and regions of the country (see Appendix for full list of family companies included in the Index) and relies on the application of objective quantitative filters on an Index Universe provided by S&P Dow Jones Indices, the Index Calculator.

For the purposes of the NBC Canadian Family Index, a company is considered to be family-controlled if the founding family controls at least 10.0%, or if an individual and/or related entities control at least 33.3%, of the company’s voting rights (see for more information).

About National Bank of Canada
With $258 billion in assets as at July 31, 2018, National Bank of Canada, together with its subsidiaries, forms one of Canada’s leading integrated financial groups.  It has more than 23,000 employees in knowledge-intensive positions and has been recognized numerous times as a top employer and for its commitment to diversity.  Its securities are listed on the Toronto Stock Exchange (TSX: NA).  Follow the Bank’s activities at or via social media such as Facebook, LinkedIn and Twitter.

For more information:

Claude Breton
Vice-President, Public Affairs
National Bank of Canada