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Frank Stronach is stepping down as chairman of Magna International Inc. (MG-T), ending more than 50 years at the helm of the company he founded in 1957.
Stronach, 78, will stay on the board as honorary chairman and founder, says the circular for Magna’s annual meeting issued today.
“This is a significant change in the ongoing evolution of Magna,” Mike Harris, Magna’s lead director, said in the circular.
The move is the latest in a slow disengagement by Stronach from the company he founded as a tool and die shop that has since grown to become a global auto parts powerhouse.
Last year, he gave up control of the auto parts giant in a controversial $860 million US deal and earlier today, the Ontario Superior Court approved an arrangement in which he surrendered control of MI Developments.
The directors will choose a new chairman from among themselves, the circular says. If shareholders approve, a revamped board of directors will consist of 10 directors, eight of whom will be independent.
Stronach’s departure caps a tumultuous year in the life of the company.
It started with the plan to buy out the controlling shares with which he controlled the company since 1978 and included the resignation of his daughter, Belinda Stronach, as executive vice-chairman and an officer of the company.
Siegfried Wolf, who had been co chief executive officer of the company along with Donald Walker, resigned last fall.
“One of the factors influencing the decision to give up voting control of Magna was the increasingly restrictive rules governing the management of companies,” Stronach said in his message to shareholders contained in the company’s 2010 annual report, also issued today. “I believe regulators have put in place excessive rules that stifle the market’s creative forces-namely, the innovative managers, entrepreneurs and innovators who are the engines of new wealth creation.”
He urged the revamped board of directors and Magna’s management to adhere to the principles that he believes helped Magna grow to become one of the world’s largest auto parts makers, such as the corporate constitution, profit sharing and commitment to research and development.
In addition, he said, “it is my opinion that the company must continue to exercise caution in regard to taking on debt.”
That warning comes more than 20 years after Magna’s trip to the edge of the financial abyss in 1989-1990, when a debt-fuelled expansion binge led a restructuring.