by Luke Jones
Posted 7/8/2013 12:00 am
Updated 9 months ago
E. Ritter & Co., a family-owned business in Poinsett County in its fifth generation, has shifted through decades of changing business trends and is now training its first CEO who’s not part of the Ritter family, Chip Dickinson.
Dan Hatzenbuehler, the previous CEO and current chairman of the board, is married to a great-granddaughter of founder Ernest Ritter. In 1998, the company decided its two biggest components — its agricultural business and its communications business — had grown too large for one person to lead, and the board asked Hatzenbuehler to help fill the gap.
A practicing lawyer in Memphis, Hatzenbuehler had served on E. Ritter’s board since 1978.
“Ritter Arnold, who is my wife’s first cousin, had been working for the company at that point for about 20 years or so, and Ritter took the primary responsibility for the ag side and I took the primary responsibility for the communications side,” Hatzenbuehler said.
Hatzenbuehler served as CEO of E. Ritter & Co. and Arnold served as president of Ritter Agribusiness Holdings.
By 2010, Hatzenbuehler was thinking it was about time to start looking for his successor. The company’s 127-year history had involved a number of company leaders dying or retiring without an immediate successor, and Hatzenbuehler didn’t want to repeat that history.
It took about a year to find the man for the job. On Jan. 1, E. Ritter’s board voted in Dickinson as CEO of the company, which has revenue of about $200 million a year.
Dickinson had worked from 1995 to 2011 for Anderson-Tully of Vicksburg, Miss., a timber company that was in its fourth generation of family ownership before it was acquired by The Forestland Group LLC of Chapel Hill, N.C.
One of the challenges of leading E. Ritter is the fact that it is essentially two completely different companies.
Its agribusiness side leases out farmland in and around Poinsett, Mississippi and Cross counties. It also has a 4 million-bushel grain storage facility and co-owns a cotton gin, both in Marked Tree.
The other division, E. Ritter Communications, mainly manages three small telephone companies: one in Marked Tree, one south of Harrison and one in Millington, Tenn.
It also has a cable television service and is a competitive local exchange carrier in Jonesboro.
Both divisions are wrapped up in ever-changing industries.
For example, the ag division has had to make many divestitures through the years. Last year, the company sold its crop services sector.
“Over time, we’ve been shrinking our portfolio of companies on the ag side to really be able to focus on what was always our prime asset, our farmland and farm operations,” Hatzenbuehler said.
But the increasing value of farmland has created other challenges.
“It’s difficult to acquire farmland, as well as logistics, being able to efficiently move our crops into higher-value markets,” Dickinson said.
Hatzenbuehler said the globalization and consolidation of agriculture has moved competition to an international scale, and E. Ritter must find ways to sell into those markets.
The communications industry is perhaps even more tumultuous.
Part of E. Ritter’s success in the telephone business was because from the 1930s up until about 2000, the government provided substantial subsidies to rural phone companies.
“Beginning in 1996 when the Telecom Act was passed that ushered in deregulation, it also increased competition,” Hatzenbuehler said. “Starting then, the amount of support that rural companies have been getting from the state and federal government has been declining, and declining rapidly.”
E. Ritter saw this coming, Hatzenbuehler said, and started finding other ways to grow its communications side that didn’t depend on subsidies, like cable TV and Internet.
“Our most recent foray in communications is a wholesale transport division which goes over our fiber network,” Hatzenbuehler said. “It provides capacity for other carriers. For example, we’ve built out fiber for Verizon to cell towers to enable 4G communications. That fiber also connects to our network, and we’re selling that capacity over our fiber network to other wholesale communications providers.”
While Dickinson is overseeing the company’s operations, Hatzenbuehler is now working with the Ritter family. Only two family members are among about 300 employees on the payroll: Hatzenbuehler and Ritter Arnold. The rest of the family are shareholders.
“When the family was small, back in the third generation, it was small enough that it could get around the proverbial kitchen table,” Hatzenbuehler said. “Starting with the fourth generation, my wife’s generation, we started having kids, and now some of those kids have kids, and you’ve lost that ability to really communicate effectively through a large group of shareholders.”
The company has about 45 family owners dispersed all over the country from Boston to San Diego to Florida to Denver, Hatzenbuehler said.
“It’s that geographical dispersion plus the generational dispersion that creates a lot of the really interesting issues to a family business,” he said. “Since 2009 we have been focusing an awful lot of time and energy on doing some governance things to really enhance the family ownership and enhance the desire of the family members to remain in the family business for another five generations.”
Hatzenbuehler said 2009 was when the company’s board was restructured from being mostly family members to being mostly independent directors. At the same time, the company created the unofficial “Ritter Family Council,” with seven members whose job is to keep the family informed and educated about the company’s activities.
For example, the council performed a survey of family owners to gauge their feelings on what family values should be reflected in company governance. In 2011 the council released a “First Owners’ Plan” which detailed those values and contained a familial mission and vision statement.
“They help plan the annual shareholders’ meeting and are also very helpful in communicating with the independent directors,” Hatzenbuehler said.
The family is also partly in charge of the company’s philanthropic activities. Both employees and family members make up the Ritter Family Endowment Committee.
“They get together four times a year to decide what types of charities and things to support in our operating areas that meet these family values and enable the Ritter family to give to the communities where we operate,” Dickinson said.
“They are very important to our town and our community,” said Sandee Teague, president of the Marked Tree Chamber of Commerce, speaking of the company in general. “They’re very much a backbone in Marked Tree. The family gives back to the town and our community, and we appreciate that very much.
“If something was needed in this town and county, we got it. Through jobs opportunities and leadership, they give back. And they believe in Marked Tree.”