His way or the highway: Frank Stronach is God's gift to shareholders. Don't believe it? Just ask him

It's a cool, clear Friday afternoon. But Frank Stronach isn't out enjoying the spring sun. He's holding court, sitting at a round table with his key corporate knights, inside the posh dining lounge of the Magna Golf Club, which rests next to Stronach's corporate compound in Aurora, Ont., about 40 minutes north of Toronto. Nobody looks scared. The group jokes over lunch—the club serves a nice “Frank Caesar” salad. But hostile forces are gaining strength.

In a few days, Canada's most flamboyant businessman will chair three annual general meetings, facing off against angry shareholders who buy his stock but not necessarily his philosophy. He'll answer charges of greed—for taking what he considers fair pay out of Magna International Inc.'s auto-parts business. He'll answer charges of indulging his own passions at shareholders' expense—at MI Developments Inc., a real estate venture spun out in 2003, investors are threatening to sue over plans to use their money to support Magna Entertainment Corp. (MEC), a horse-racing and gaming subsidiary that has lost more than US$200 million over the past three years. And he'll answer charges that MEC is just another one of Frank's follies—some of its shareholders want it to sell off the racing assets that Stronach has worked so hard to cobble together over the past six years.

It's hard to be a visionary these days. At 72, Stronach—who controls Magna and MID through super-voting shares, which also gives him control of MEC—is probably starting to feel some age. But he isn't slowing down, and he still has big ideas—the biggest of which is to turn MEC into a half-trillion-dollar-plus operation. He isn't blind to the fact that, as he puts it, many people are watching to see if he'll “make a mistake or get caught doing something improper.” The thing is, he just doesn't care—and he doesn't care who knows it. That's probably the reason he agreed to sit down with Canadian Business for an exclusive and far-reaching interview on all things Magna, including rumours of side deals and plans for his empire that might just scare the hell out of investors.

Inside the Magna Golf Club's grand dining hall, members are kept comfortable by giant hearths that bookend the room. Fire also burns in Stronach. His eyes glow as he talks about being misunderstood. And they don't blink when he states, for the record, that he has nothing to hide. “Nobody can say I don't keep my word or do things different than what I say,” he says. “And I pay for my own cleaning, I can assure you of that.”

Remember the PC movement? Plenty of people objected when the forces of political correctness threatened to turn the working day into humourless, flirt-free toil. The resistance to the current rage for “governance correctness”—let's call it the GC movement—is different. More than a few who support Bay Street think it has gone too far. But with investors still recovering from high-profile corporate meltdowns, most business leaders are unwilling to declare verbal warfare on the GC movement. Stronach isn't one of them. “The time we spend complying with regulations is now enormous,” he says. “I'm fine. But I'm worried for the future.”

Magna's chairman insists the regulators and the press have overreacted to a few stock manipulators. He thinks it might make sense to force executives to keep shares until a year or two after leaving a company—allowing time for anything bad in the books to surface. But that's it. Nothing else needs to change. “We have laws,” he says. “If you were in the till or did something improper to enrich yourself, there are jail sentences.”

According to Stronach, entrepreneurs need freedom to fly, but rules and regulations and shareholder activists are clipping their wings. They're also making it more difficult, he maintains, to foster an entrepreneurial spirit among employees. “Years ago,” he says, “I could just turn to one of my managers and say, 'Look, here's a key to such-and-such an apartment or a house. Take your wife or your girl. You've worked like crazy. You have accomplished some good—now relax a bit.' You can't do that anymore.”

Stronach says that's a problem—if you want to see more companies like Magna, which spends millions on golf and keeps a yacht in Florida. “I've been on that boat twice in the last five years,” Stronach says. “And I don't golf.” Magna, he says, buys toys and builds playgrounds for employees and customers. “This is why we're farther ahead. I try to own the hearts and minds of key people.” When there is global economic warfare, Stronach adds, “you can only win if you attract the best people.”

Paul Cellucci, who recently joined MEC to lead lobbying efforts to change U.S. gaming regulations, knows something about bullheaded and demanding bosses. “George Bush and Frank Stronach both have core principles,” says America's former ambassador to Canada, who is vice-president of corporate development at MEC. “And they both stick to their guns. I like that.”

Not everyone, of course, can stomach the way Stronach controls his organizations. Proponents of corporate reform think he should be dragged into the executive washroom and forced to clean up his act. And the fight is getting ugly, on both sides of the border. Greenlight Capital Inc., a New York-based institutional shareholder in MID, for example, recently made headlines by comparing Stronach to Fidel Castro (see sidebar). The insult, issued at Toronto's Le Royal Meridien King Edward hotel during MID's annual meeting in early May, hit close to home. After all, Stronach's Austrian father was a die-hard communist.

But Stronach is not a dictator. He's not a socialist. This apple fell far from the tree.

First child and only son in a family of five, Franz Strohsack was born in Weiz on Sept. 6, 1932. A natural athlete, he had a shot at professional soccer in Switzerland. But his mother planted a seed when she sent him to learn the tool and die trade at 14. She unleashed his entrepreneurial spirit, and the force was strong in young Franz. In 1954, armed with a new name, eight years of experience and about $200, he set out to make his mark. Canada was the first target country to approve a visa, so he came here.

You couldn't write a better rags-to-riches script. Stronach started small. He washed dishes and worked other odd jobs. By 1957, he had saved enough to open a machine shop. It was housed in a Toronto garage. Stronach slept on a cot in the corner. He worked hard. Business grew. Employees liked his willingness to share responsibility and wealth, while customers were attracted to his motto: “Better product for a better price.” (Still Magna's motto, by the way.) In 1960, Stronach's operation landed its first auto-parts business, a contract to produce metal-stamped sun-visor brackets for General Motors. In 1969, he merged his machinist ventures with a public company called Magna Electronics Corp., an aerospace, defence and industrial components manufacturer. He took over, changed the name, and focused the business. Decades later, Magna is the most diversified automotive supplier on the planet. It has more than 80,000 employees and close to 300 facilities. They design, develop and manufacture vehicle systems, assemblies, modules and components. In Europe, Magna is setting a new supplier trend by engineering and assembling complete vehicles.

After building a US$20-billion-plus industry giant, Stronach may be justified in regarding himself as the standard by which other empire builders can be labelled great. But he's no old-school capitalist. He has a “fair enterprise” philosophy that sees no place for what he calls “stock flippers” in the boardrooms of North America. He'd rather have managers and shareholders predetermine how a company splits profits, while setting a few clear performance requirements and limits on executive power. After that, publicly traded companies, he argues, should be free to run like private ones, so long as management sticks to the deal and obeys the law—even if the boss wants to spend money on whatever it takes to keep employees happy and productive.

Magna shareholder meetings have started to sound like a broken record in recent years, one that plays two theme songs—”I'm worth every penny” and “My way or the highway”—over and over again. “Canada would be better off with more Frank Stronachs,” Magna's main man insisted two years ago after the Ontario Teachers' Pension Plan and other institutional shareholders withheld support for Magna's board, to protest Stronach's 2002 pay package of US$33 million. “I should get more.” Last year, Stronach reportedly promised Magna directors he'd play a more investor-friendly tune at the AGM. But his 2003 take-home was US$36 million—more than any CEO of any publicly traded automotive firm in North America made, and about US$25 million more than General Motors boss Rick Wagoner's pay. Led by the OTPP, institutional shareholders raised another stink, claiming directors failed to act independently or offer real justification for Stronach's pay. Instead of playing nice, Stronach once again did it his way. At the 2004 shareholder gathering, he referred to himself as a king. He reminded investors they are free to take a walk. And he challenged anyone to attack his pay after looking into Magna's history.

This year, institutional shareholders again protested Stronach's compensation—which was (insert drum roll here) US$40 million in 2004. And Magna's high-profile directors, including former Liberal industry minister Edward Lumley and former Conservative premier of Ontario Mike Harris, were re-elected at the 2005 AGM only thanks to Stronach's super-voting shares. “If I didn't like a restaurant,” he told investors, “I wouldn't eat there.” (There was irony in that metaphor: back in the late '80s, investors bolted from Magna when it backed non-automotive ventures that included a restaurant named after Stronach's daughter, Conservative-cum-Liberal cabinet minister Belinda.)

Magna's conflict with institutional shareholders might be getting old, but it still makes headlines. And yet, if you take the Stronach history challenge and try to understand why Magna is run the way it is, you might just find yourself wondering who's really in the wrong.

Frank Stronach and Conrad Black have more than a few things in common, beyond their big egos, fat wallets and tailored suits. Both men launched Alexander-type campaigns on the business world, building impressive empires along the way. The manufacturing mogul likes country castles; the fallen press baron seems to prefer posh urban flats. Both have used complex organizational structures and special voting shares to stay in control. Both love politics and attention from the media—unless, of course, the focus is on transactions or payments to their private companies. They both hate questions about their eyebrow-raising hobbies. Black likes to play historian, which may explain why his shareholders spent millions on a stack of Franklin Delano Roosevelt's old papers. Stronach likes the ponies. He owns more race horses than anyone else in North America, which does explain why some investors felt betrayed when Magna started buying horse tracks in the '90s.

Beyond the superficialities, however, Black and Stronach are clearly different beasts. Black started with a multimillion-dollar inheritance. He landed in hot water with directors of Hollinger International Inc. and regulators over money that allegedly found its way to executives without board approval. Over the years, Magna's organizational structure, and a few land deals, have been questioned by industry watchers and the press. But nobody has ever really accused Stronach of anything other than being an overpaid control freak. Even his most vocal critics will not go so far as to suggest he does anything illegal.

Joe Cornell, a CFA with Chicago-based Spin-Off Advisors, which focuses on subsidiaries and spinoff strategies, took a hard look at Magna in 2003 after it announced plans to cut out MID from its auto business as the new parent to MEC. The analyst instantly disliked Magna's fondness of dual-share structures. In his report to clients, Cornell noted that the Stronach family had an equity interest in Magna somewhere between “really, really small” and “just small”—making it a stretch to “consider Magna a family business.” The analyst also complained about some of Magna's valuation methodologies and reporting. “Anyone trying to model this company in detail is kidding themselves,” he said.

Cornell pointed out that former subsidiaries Tesma International (an engine and transmission parts maker), Decoma International (an exterior parts operation) and Intier Automotive (an interior parts business) obviously helped keep the mothership healthy in the past. Prior to creating these spincos (which were recently privatized to improve competitiveness), he noted Magna issued itself convertible preferred stock. It also extracted annual administrative and affiliation fees. Decoma, for example, paid Magna more than US$92 million in fees for 2000, 2001 and 2002. Cornell thought that should say something to spinoff investors. But the analyst concluded that Magna's books passed the sniff test, noting the company doesn't appear to be run by guys who “would be associated with a WorldCom or Xerox-like accounting scandal.” And while he thought the stock was probably too “funky” for many American tastes, especially since it “reports under mysterious Canadian GAAP,” he had nothing but good things to say about Magna's creditworthiness and profitability. He wasn't sure the Magna culture was responsible for the “empirical fact” that it makes more money than its competitors do—despite its generous social spending, profit-sharing and executive compensation—but he couldn't find a better way to explain it.

And that brings us back to why the two favourite targets of Canada's good governance movement aren't birds of a feather. Even Stephen Jarislowsky, who is no fan of Stronach or Black, can tell the two apart. Lord Black, he says, used “the back door” to stuff his pockets, while Stronach takes money “out the front.” Another way to look at it: when Black faced off against American regulators, he invoked the constitutional Fifth Amendment against self-incrimination; when the chairman of Magna feels the need to defend himself, he invokes a constitution of his own.

The “Magna Carta” is a contract that limits senior managers to salaries below industry average and rewards them with bonuses only if profits are generated for all stakeholders. When the company is operating in the black, 10% of pre-tax profit must be set aside for employees; up to 6% goes to senior management; a minimum of 7% goes to research and development; and 2% goes to charities to support “the basic fabric of society.” Shareholders get, on average, 20% of the company's annual earnings. To keep everyone honest, Magna is required to have a majority of independent directors on its board. Management can pick them, but shareholders get to add their own directors if Magna fails to generate a 4% return two years in a row.

Fundraisers love Stronach's commitment to social responsibility. And believe it or not, when he unveiled the constitution idea in 1984, he was considered God's gift to corporate governance, for taking a stand against execs who, in Stronach's words, “stuff their pockets with all the gold they can find.” Maybe not everybody agreed with his assessment that the document was “perhaps the most important chapter in western industrial society in many years.” But it was widely seen as a bold initiative.

According to Mike Harris, it still is. The former politician says he agrees with a lot of what institutional investors are trying to do with corporate governance. “However,” he adds, “Magna is unique. Magna is different. The corporate constitution is essential to the success of the company. And if rigorously upholding the constitution means Magna's directors are yes-men, then we are yes-men to the constitution, not Frank.”

Stronach, meanwhile, points out to his critics that he created the Magna constitution after a dual-share structure was already in place. “When I sold into Magna, I was very green—I didn't know the stock market,” he says. So in 1978, Stronach went to the shareholders and said, “I don't really want to be part of a public company. But if I am, I want to have management control.” He offered to trade about 25% of his stake for super-voting shares. More than two-thirds of the company's investors agreed. Six years later, after determining that he had too much power, he went to his law firm and asked for help creating a corporate constitution. “My lawyers said, 'Frank, are you crazy?” he recalls. “Why do you want to do that? Right now, you can take 10% or 20% of profits—nobody can stop you.'” He told them he had a vision. He knew he could build a great company, but it had to have clear-cut rules and principles. “I put in this constitution that basically limited me,” he says. “And I did it after I already had control. You show me one other person who would do that.”

Before selling the constitution to investors, in 1984, Stronach dumped 400,000 class A shares (worth about $7.5 million), leaving him with 103,756 of Magna's 19.2 million subordinate shares. He used the proceeds to pay debts related to his interest in farms and horses, explaining to investors that he wouldn't be productive if he couldn't “go and sit in the fields and think.” He also said he'd always “hold a sizable block.” Whether he has done so is open to debate. The success of Magna is not.

In 1984, Magna reported earnings of $31.6 million on sales of $505 million. At the time, it put about $38.10 worth of parts in every North American vehicle. This year, Magna expects average dollar content per vehicle to be more than US$700 in North America and above US$315 in Europe. That's why Stronach's compensation has jumped to more than US$40 million from about US$1 million in 1984. What does he do to deserve his pay? “There are many forces that can tear apart a company,” he says. “You've got unions, you've got short-term investors. You've got old employees who aren't so much interested in research and development—they want the stock higher. And you've got young employees who want to earn more. So you've got all these interests and all to a certain extent have legitimate reasons for their points of view. I'm up here like a church.”

Magna's compensation policy may not be to every investor's liking, but it isn't arbitrary. According to Vincent Galifi, Magna's chief financial officer, the combined bonuses awarded to senior management, including Stronach, do not ever exceed the constitutional 6% level—even if you “include restricted shares and value of all options granted.”

That, however, doesn't mean shareholders shouldn't worry about things that could keep Stronach's compensation down.

In a speech to the Association of Chartered Certified Accountants last year, Michael Wilson, chairman of the Canadian Coalition for Good Governance, claimed investors would be crazy not to use governance measures to help decide where to place their bets. “On a risk-avoidance basis alone,” he asked, “why would you put your client's money into a company with anything less than excellent governance practices, when those practices could bring that company onto the front pages and you onto the carpet in terms of your investors?” This March, analysts at UBS Canada, of which Wilson is chair, issued a bullish report on Magna, calling the company good value. “We expect Magna shares to outperform over the next 12 months,” they said. “We think growth is adequate, valuation is attractive and returns are strong.” No mention of Magna's governance practices—so if UBS analysts aren't crazy, they presumably think those practices are either acceptable or irrelevant. Or both.

They aren't the only ones that see Magna's automotive operations as a good investment. At press time, Dow Jones research reported 14 Buy ratings, six Holds and one Sell on the stock (TSX: MG.SV.A). By mid-May, Magna—which made a recent Canadian Business listing of most promising defensive stocks—had pretty much matched the 120% return offered by the S&P 500 over the past 10 years. If the end date had been the start of this year, Magna's 170% return would have blown the S&P away. And when compared to peers, Magna consistently outperforms.

Nevertheless, it is no secret Magna has in the past spooked investors with its high-profile corporate adventures. In the '80s, there was Vista, a business magazine. There were ski condos. And let's not forget the line of tennis gear or the Magna Air concept (think: flying beds). Those ventures, along with a debt crisis and Stronach's failed bid to become a member of Parliament as a Liberal in 1988, helped push Magna's shares down more than 80% in 1989 and 1990, when the stock hit $2.75. But Stronach rallied the company, which saw its shares soar 35-fold over the next eight years. As Bloomberg magazine points out, Magna outpaced Microsoft between 1991 and 1998. And then, the following year, Magna purchased its first horse-racing track—and lost about a third of its market cap. It bounced back again, but only after spinning off MEC as a subsidiary. Stronach also promised Magna would stick to the auto business. But there was a time limit on the promise—and the handcuffs come off next year.

Magna parted with its controlling interest in MEC when it created MID in 2003. But critics claim the core company still indirectly throws money at the gaming venture. Magna pays about $9 million annually to use MEC's two golf courses (there is another in Vienna) for “corporate and charitable events, as well as for business development purposes.” There is nothing illegal about the transaction. But golf experts call the fees outlandish. (I asked a sportswriter friend how many rounds of golf a typical company the size of Magna would buy in a year; he thought the number would be 4,000 or so. And how many rounds would $9 million buy at a top course? About 45,000, my friend figured—or 123 rounds a day.)

Peter Sklar, an analyst with BMO Nesbitt Burns, used the golf transaction to remind clients last November of “the issues that often arise in circumstances of common control as there is between Magna International and MEC.” The same month, Merrill Lynch analyst John Casesa issued a report that had nice things to say about Magna—it endorsed the logic of putting former GM executive Mark Hogan, who became president last year, in charge of building business in Asia; it praised Magna's new focus on electronics and its plan (now completed) to privatize Tesma, Decoma and Intier. All of that, Casesa thought, offered the potential for share multiple expansions going forward. But (and it's a big “but”) the analyst also pointed out that Magna has not promised “to renew its forbearance agreement prohibiting non-auto investments after expiration in May 2006, and non-renewal could reverse the gains we expect.”

Magna's constitution states management can spend 20% of the company's equity on non-automotive ventures without shareholder approval. And in case you haven't noticed, the pile of cash that could go elsewhere got bigger after the recent privatizations.

Kids dressed in monster costumes were not the scariest thing knocking on MEC vice-chairman Jim McAlpine's door last Halloween. His company had lost US$44.7 million in the third quarter, and on Nov. 1, as CEO, McAlpine was slated to report those results to investors who actually bet Frank Stronach's long-shot attempt to dominate the Sport of Kings would pay off. That's when he was forced to recognize “the strain that our investment strategy and heavy losses have placed on our resources.”

Stronach didn't spend Halloween weekend focusing on losses. On Oct. 30, his horse Ghostzapper zapped away any scary financial thoughts he might have harboured when it won the US$4-million Breeders' Cup Classic. Stronach watched the win from a penthouse suite at Lone Star Park in Grand Prairie, Texas, which MEC controls. After the race, he celebrated with what has been called “a champagne-soaked dinner” at the Mansion on Turtle Creek, where his horse's wire-to-wire victory was replayed on a large-screen TV.

Years earlier, as the story goes, another one of Stronach's thoroughbreds won a race at Southern California's Santa Anita Park, home to the legendary Seabiscuit and a favourite place to be seen among the Hollywood set ever since Will Rogers and Clark Gable attended opening day there in 1934. But Stronach's victory, at one of the most celebrated tracks in the world, was soured when he was barred from enjoying it in the private directors' lounge—after all, he was just an owner, not a track director. “I thought it was absurd,” he recalls. “I said if I ever owned the track, I'd change that.”

That lounge no longer exists. In fact, after Magna bought the track for US$126 million in 1998, Stronach started planning the removal of everything but the San Gabriel Mountains. When it comes to racing, he likes to start over from scratch.

Stronach smiles when he tells the tale. He says he didn't start investing his automotive company's money in horse racing simply because he wanted to close a restricted club, but because he thinks he can change everything about the horse-racing business—and build the world's largest company along the way. “Magna is more than a business,” he says. “It's a creation. I've got a grandson. I want Magna to be well and strong a hundred years from now.”

Stronach still thinks MEC is a long-term winner. In fact, he repeatedly states it could easily dwarf Magna's automotive empire some day. The numbers add up like this: Horse racing currently accounts for just 2%, or US$18 billion, of the $900 billion legally bet in the United States every year. But it used to account for about 80%. Stronach plans to increase MEC's share to 20%, or US$180 billion, of that U.S. pot over the next decade. He's also targeting 20%, or US$400 billion, of the US$2 trillion legally bet in other countries. How does he plan to turn MEC into a half-trillion-dollar company? By creating what he calls a “global lottery corporation.”

Imagine a slot machine that lets you place a bet, based upon your risk tolerance, by pulling a handle, and then lets you watch your horse race live, within minutes, on a built-in TV screen. Then imagine putting that 24-hour service everywhere, including online. That's the plan. To get there, MEC, which just announced plans for a new US$100-million horse-racing complex near Detroit, needs a ton of cash to lock up more racing content and develop its 13 existing tracks—many of which will be transformed into little versions of Las Vegas, sitting next to urban centres like Miami and Los Angeles.

What it doesn't need, apparently, is golf courses. Asked how he justifies the golfing contract between Magna and MEC, Stronach rolls his eyes. Magna, he says, invested in golf to enhance its rewards-oriented culture. He sold the land to the company, but says he could have secured a better deal selling to developers. He claims that all such transactions are priced fairly and approved by a board of directors—one run by “integrity,” not personal friends. Stronach insists Magna pays a reasonable price for what it gets, which he says is a lot more than tee time. Still, he acknowledges that when MEC was created, including the golfing assets was “an accident.” The golfing business, he adds, better suits Magna's culture, so one of the first things he plans to do next year, after the forbearance agreement expires, is transfer golfing operations back to Magna. “There's no question,” he says.

What else could happen next year? Stronach isn't ready to show all his cards. But he says North American automakers are in trouble. That doesn't mean Magna and MID, which relies on Magna plants for rent, are doomed—not by a long shot. But when something threatens your main customers, Stronach says, a smart business plans for the future and does everything it can to thrive. That means thinking about having more than one leg to stand on, which is why Magna's constitution allows management that freedom to play with 20% of the company's equity. “I fully know when shareholders invest in apples, they don't want pears,” Stronach says. “But Magna's a disciplined company with great directors, and when a great opportunity comes along, it doesn't make sense not to invest.” When it comes to throwing serious Magna money at MEC next year, he adds, “I'm not saying we will, and I'm not saying we won't.”

In late January, thousands of horse people turned out for Sunshine Millions at Gulfstream Park near Miami, one of the premier winter racing destinations in the States. MEC bought it for US$95 million in 1999, and—true to form—Stronach immediately called for a wrecking ball. An initial US$145-million renovation to replace the racing surface and grandstand began last year. Future plans include retail, entertainment and residential developments. When finished, the new Gulfstream will be a model for what Stronach wants to do with MEC's premier tracks. The end game has been called the Vatican of racetracks, but it's not there yet.

This season, Gulfstream Park is a sea of beer tents, bleachers, trailers and scaffolding. Among the crowd was a couple of retirees from Oklahoma, on their annual trek to play the ponies in the Florida sun at this historic track. “We were here last year,” the husband says, “so we expected stands. This is like watching in a cornfield. And I can play in fields at home.”

Not far from the disappointed Okies, a group of MEC construction workers also express frustration. They can't wait for the racing day to end so they can work all night—as they have been every night for a while now—to make sure customers are better served next year. The new stands must be finished for the 2006 season. So says the boss, and so it will be done.

After the racing day, in a nearby bar, a few construction managers with a rare night free unwind with an MEC lobbyist, a former Californian municipal politician who accepted a new job the day Stronach “offered to double my salary.” The group is joined by a horse trainer, who raves about the new state-of-the art training facility in nearby Palm Beach County, where equestrian workers from poor countries call their new dorm-like housing “Melrose Place.” At a steak restaurant later in the evening, conversation starts to vary, but not much. The MEC crowd talks about the new racing surfaces, considered to be the best in the world. (Length, width and turf apparently makes a big difference—ask a racing fan if you have an hour.) They talk about the boss's daughter (respectfully). They talk about his son, Andy (also respectfully). And they talk about future projects at other tracks.

Late at night, at a gathering for post-dinner drinks hosted by an MEC executive, everyone finally realizes a journalist has joined the mix. But nobody stops talking about Frank Stronach. They call him brilliant. They call him humble—”for a billionaire.” They attack his critics, including the press. They can't help it. They know the man and seem to believe he can turn MEC into something larger than Wal-Mart.

Believing in Stronach when you don't know him—and he's spending your money—is another matter. At the shareholder meetings in May, it took a little old lady to ask the questions on everybody's mind. Denise Altman, 80, asked what happened to Bill Davis and Brian Tobin. Davis, a former Magna board member and premier of Ontario, quit director posts at MEC and MID last year, reportedly for health reasons. Tobin, who left the boards of both companies and his lucrative chief executive position at MID (with $2.3 million for less than seven months' work), went looking for other business opportunities. Stronach restocked his boards with former federal Liberal cabinet minister Doug Young, former Liberal MP Dennis Mills and William Sutton, a former Scotiabank executive. Sutton lasted a little over two weeks, and Magna watchers started to speculate something was scaring people off. Mills insists critics shouldn't read anything into the departures. “Brian Tobin isn't the only one around Magna that took a course on how to be a director,” he said. “No one would ever say Frank isn't demanding, but Brian didn't leave because of matters related to governance.” (Tobin didn't respond to requests for comment.)

Stronach won't talk about the former premier of Newfoundland. “You know we don't comment on those things,” he told Altman. At the Magna meeting, however, he joked that Davis had moved on to a new job as his personal adviser; the former premier tried to show he was still a loyal supporter by standing up and waving to the crowd. Davis also made an appearance at the MID investor gathering. He says critics should give Magna's chairman “credit for creating a corporate culture that built a company that now employs tens of thousands of people and supports families around the world.” He also says, like Harris, that Magna directors must respect the company's constitution.

For now, it might be too early to say whether history will record that Frank Stronach was a shareholder's worst nightmare or the greatest thing to happen to corporate governance since child labour laws. But in the near term, whether you invest in his companies or not, you might soon be seeing more of Stronach. “We have an interesting reality-TV concept to promote MEC's racetracks,” he says. He's not looking to become a TV celebrity, but Stronach says he'd agree to do a few minutes per show. And that could be enough to challenge Donald Trump as TV land's favourite axe man. After all, Stronach tries out executives like others try shoes: when one doesn't fit, he's quick with a boot, because “the longer you keep them, the more harm they do.” But Stronach claims he has no interest in Trump's catchphrase. “I'd say, “You're hired,'” he says. “There's a big difference.”