An end to all in the family for Carlson Companies

  • Article by: DAVID PHELPS , Star Tribune
  • Updated: November 3, 2007 - 4:17 PM

With Curtis Carlson Nelson out of the picture, the succession search is on for the first non-family member to lead the firm.

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Curtis Carlson Nelson. March 2003 handout.

Early next year, 5,000 customers and guests of the Carlson Companies will gather in Las Vegas to celebrate the organization's 70th anniversary. Notably absent will be Curtis Carlson Nelson, the onetime heir apparent who is in a legal battle royal with his family concerning his fall from power and is fighting demons of his own.

The anniversary will be a bittersweet one for Marilyn Carlson Nelson, the second generation to run the company and one of the best-known and most successful businesswomen in Minnesota history.

The carefully crafted succession plan that her father hoped would keep a family member in the chief executive's seat is dead. The firm instead is searching for the first non-family member to run the enterprise that the legendary Curt Carlson founded in 1938.

A lawsuit between Nelson and his mother and Carlson Companies contends that Nelson, 43, was wrongfully denied the job of CEO and a slice of the family's considerable fortune, which is held in trust. A countersuit by Marilyn Carlson Nelson and the company contends that Nelson was not capable of running the large, international business.

Before he left the company, Nelson rose to president and chief operating officer. In 2006, a restructuring of the executive team by his mother left Nelson without a front-line job. He eventually left the company, and in May he sued.

Meanwhile, Nelson has struggled with a previously acknowledged alcohol problem.

Twice since the lawsuit was filed, Nelson has been arrested on charges of driving while intoxicated. The first instance was in Minneapolis during the Memorial Day weekend, when he was stopped for driving erratically and recorded a 0.211 blood-alcohol level when he took a breath test. The second arrest came July 29 in Palm Beach, Fla. That arrest, which involved property damage from a car accident, was dismissed on the condition that Nelson seek treatment for alcohol dependency.

Nelson, through his communications adviser Jon Austin, declined to be interviewed for this report. Similarly, Marilyn Carlson Nelson declined to comment concerning the litigation and the company's search for a new CEO.

In a prepared statement, the company said that Marilyn Carlson Nelson "will continue as CEO of Carlson as our board of directors' CEO search team continues to work to identify internal and external candidates for the CEO position." She will remain in her current role until the board "identifies the best candidate" to lead the company, the statement said.

"The search is organized and orderly, but certainly not public," said Kim Olson, the company's chief communications officer.

The heirs of Curt Carlson are wealthy people. Marilyn Carlson Nelson and her sister, Barbara Carlson Gage, rank 204th on the 2007 list of Forbes magazine's 400 richest Americans, worth about $2.2 billion each.

The privately held Carlson empire includes the Regent, Radisson and Country Inns & Suites hotel chains, T.G.I. Friday's restaurant group, Regent Seven Seas cruises and Carlson Marketing Worldwide. According to Forbes, the company, with 57,000 employees, had revenue in 2005 of nearly $5 billion.

Professionals who counsel family-owned businesses concerning issues such as leadership succession say that the next CEO at Carlson Companies will need not only strong business skills but also will have to be a diplomat in dealing with a board of directors that is family dominated.

"In addition to all of this business stuff, you have to have a strong understanding of family dynamics," said Tom Hubler, who runs Minneapolis-based Hubler Family Business Consultants. "Families have good intentions and want to be successful, but often contribute to their own demise by interfering. It'll be a challenge."

Carlson Companies has three outside directors and six family members on its nine-member board.

The safe route, business consultants contend, is to look for someone the company is already comfortable with -- an internal executive or one who is with a company that already does business with Carlson.

"A family business is very cautious about who they bring in. It's highly unlikely they'll bring in a stranger," said Steve Swartz, head of Minneapolis-based Swartz Consultants. "I would be surprised if they didn't look internally for someone who could oversee it or look within the ranks of the professional firms that already serve them."

In some respects, 2007 has been a year of tribute for Carlson Nelson. Forbes still considers her one of the most powerful women in American business, ranking her 78th of 100. The respected American Society of Travel Agents placed Carlson Nelson in its Travel Hall of Fame, noting that her company is parent to "many of the best recognized brands in the travel and hospitality industry."

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