CASE
New Way
Distributing
“PaPa”Steve Smith began delivering newspapers by bicycle. He discovered that some
of his wealthier customers would pay him to pick up groceries and deliver them along
with the newspapers. So he founded New Way Distributing, Inc., and within 15
years, he had 25 trucks and a small warehouse. New Way is a national distributor of
specialty food products to grocery stores and restaurants. It specializes in high-end pro-
ducts bought directly from producers and sold to restaurants and, as a retailer would,
directly to consumers too.
PaPa died in 1960, survived by two sons who continued to expand the business,
in substantial part by establishing small- and mid-sized grocery stores in ethnic neigh-
Beginning with PaPa, the family had a history of transferring small blocks of New
Way stock to descendants annually. Consequently, while Big Joe (eldest brother) and
the younger Peter had voting control, their children and grandchildren owned signifi-
cant numbers of shares.
Three of Big Joe’s six children work in the business today. One of Peter’s four
1
New Way’s CFO spends a fair bit of time, along with another full-time New
Way employee, handling financial matters for family members, including preparing
tax returns and numerous nonbusiness-related tasks. These two people also coordinate
Big Joe died last year. Peter is struggling through succession issues with Big Joe’s
widow and the active fourth-generation family members. The issues generally involve
concerns about whether the two family branches have equal influence over the com-
pany and whether compensation for members of the two branches is fair and equal.
next year, in part because he doesn’t have any ideas as to what else should be covered.
QUESTIONS
1. If you were Peter, would you hold another shareholder meeting next year? List
issues that you think the family should address in next year’s meeting.
2FAMILY BUSINESS