Prem Watsa, the chairman and chief executive officer of Fairfax Financial Holdings Ltd., will soon be joined on the investment firm’s board by a familiar face: his son.
Ben Watsa, a 36-year-old fund manager at Lissom Investment Management, was nominated to the board last month by his father, who controls 42.6 percent of the voting shares in the company he founded. Fairfax shareholders gathering Thursday in Toronto for the annual general meeting are scheduled to vote on the younger Watsa’s nomination along with other company matters.
“It’s becoming more like a family-controlled corporation,” said Matt Fullbrook, manager of the Clarkson Centre for Board Effectiveness at the University of Toronto’s Rotman School of Management. “You buy into a company like Fairfax knowing that it is controlled by an individual who has run a very successful company for a long time. This is the first event that shows maybe Prem Watsa will be passing along the company to his son.”
Watsa, 64, said he nominated his son to the publicly traded firm’s board to ensure the continuation of Fairfax’s “fair and friendly” culture. The move, which is common among Canadian family-controlled companies, should help reassure shareholders that Fairfax will remain committed to its value-investing strategy, he said.
“Focusing on the long term necessarily requires the next generation’s involvement and familiarity with the management of Fairfax,” Watsa said in a March 6 letter to shareholders. The firm had $26.2 billion in investments at the end of 2014, according to its annual report.
Power Financial Corp., owned by Canada’s Desmarais family, also includes family members on its board. The founder, Paul Desmarais, passed control of the Montreal-based company in 1996 to sons Paul Jr. and Andre, who share the chairman role. Rogers Communications Inc.’s board has four family members.
Watsa named his son after Ben Graham, the value investor and Columbia University professor who influenced billionaire Warren Buffett among others and whom he frequently quotes in letters to shareholders. Buffett, 84, has said his son Howard, a farmer and philanthropist, should eventually replace him as chairman of the board at Berkshire Hathaway Inc. Howard Buffett, 60, has been a director at the company since 1993.
Fairfax has rallied 42 percent in the past 12 months, compared with the 9.7 percent advance of the 47-company Standard & Poor’s/TSX Financial Services Index.
British Columbia Investment Management Corp., one of Canada’s largest pension-fund managers and owner of 103,441 Fairfax shares, has already voted in favor of adding Ben Watsa to the board.