Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Henkel Family Keeps a Chemical Empire Under One Roof
Transcript
- Lucas: So you know those little blue Loctite tubes you find in any hardware store? Or the bottle of Persil detergent that's probably sitting in your laundry room right now? They both come from the same company—Henkel—and they're both controlled by the same German family that founded the business in 1876. Luna: That's a pretty wide range—industrial adhesives and consumer laundry products. Not the typical combo you see in a family-run business. Lucas: Exactly. And that's part of what makes Henkel interesting. The company today does about 22 billion euros in annual revenue. It's in three divisions: adhesive technologies, laundry and home care, and beauty care. But through all of that diversification, the Henkel family has held onto roughly 61 percent of the voting shares. The key word there is 'voting.' Luna: So they own less than a majority of the economic value, but they control the votes? That's a dual-class structure. Lucas: Right. Henkel has two classes of shares: ordinary shares and preferred shares. The ordinary shares carry multiple votes per share—I think it's something like three votes per ordinary share versus one vote per preferred share. The family holds almost all of the ordinary shares. So even though they own maybe 25 to 30 percent of the total equity, they control over 60 percent of the votes. That's been the foundation of their governance since the 1920s. Luna: And that structure let them survive the 20th century—two world wars, the division of Germany, and then reunification. How did they handle the Cold War splitting their home base? Lucas: Henkel's headquarters was in Düsseldorf, which ended up in West Germany. But they had significant operations in the East—factories, supply lines, distribution networks. After the war, those were nationalized or cut off. The family essentially had to rebuild their supply chain from scratch in the West. And they did it without losing control because the voting power was concentrated in the family, not diluted by outside investors. Luna: Was there any point where the family considered selling or taking the company public in a way that would have loosened their grip? Lucas: They did list preferred shares on the stock exchange—Henkel is publicly traded, but the family retains control through the ordinary shares. That allowed them to raise capital for expansion in the 1960s and 70s without giving up voting power. They used that capital to acquire brands like Schwarzkopf in hair care and Loctite in adhesives. The family's attitude has always been: we can bring in outside money, but we don't bring in outside control. Luna: That's a classic family business strategy, but it requires discipline. Not every family manages to keep that line clear over four or five generations. Lucas: And Henkel has had some close calls. In 2008, during the financial crisis, the company's share price dropped sharply. Activist investors started sniffing around—they saw a company with strong brands, good cash flow, but a family controlling the votes. Some activists wanted the family to sell or break up the company. Instead, the family did something interesting: they bought back a large block of ordinary shares from a family branch that wanted to cash out. That move consolidated voting power even further and signaled to the market that the family wasn't going anywhere. Luna: So they used the crisis as an opportunity to tighten control. What was the cost? Buying back those shares couldn't have been cheap. Lucas: It wasn't—the buyback was worth several hundred million euros. But the family funded it through a combination of debt and retained earnings. And the long-term payoff was that they kept the company independent. Today, Henkel is still family-controlled, and the share price has recovered well beyond those crisis levels. Analysts often cite the stability of the family ownership as a reason for the company's consistent R&D spending and its ability to make long-term bets. Luna: What about the succession question? The current CEO is Carsten Knobel, who is not a family member. How does the family ensure its interests are protected when a non-family CEO is running the show? Lucas: The family has a family council and a shareholder committee that maintains regular contact with the executive board. They also set dividend policy—the company pays out a consistent portion of earnings as dividends, which keeps family members financially aligned. And crucially, the family has a clear set of values and a written family constitution that outlines the principles for ownership and management. They don't need a family member in the CEO chair as long as the CEO respects those principles. Luna: So the family's role is more like a steward than a manager. They set the guardrails, then let professional executives drive the car. Lucas: That's exactly the model. And it's worked for 140 years. The current generation includes about 200 family members who are shareholders, but only a handful sit on the supervisory board. The rest collect dividends and stay informed through family meetings. There's even a family office that manages the personal wealth and helps educate younger members about the business. Luna: That kind of structure—a family that stays involved but not meddlesome—is really hard to pull off. Most families either disengage completely or try to micromanage and drive away talent. Lucas: Right. And Henkel also has a rule that family members who want to work in the company need to have relevant outside experience first. You can't just graduate and walk into a senior role. That keeps the family members who do join the business credible with non-family executives. It's a system designed to balance legacy with professionalism. Luna: It's interesting to contrast that with what we've seen in some other family business episodes—like the Ford family, where a family member was brought back as CEO during a crisis. Henkel seems to have taken a different path. Lucas: Ford is a great counterexample. The Ford family also has a special class of shares that gives them 40 percent voting power, but they've cycled through family and non-family CEOs. Henkel has been more consistent: since the 1980s, the CEO has been a non-family professional, with the family represented on the supervisory board. That separation has given the company strategic continuity. Luna: You know, one thing that strikes me about these conversations—whether it's Henkel or Mars or Hermès—is that the family's long-term thinking often gives them an edge over public companies that are obsessed with quarterly earnings. It's something we don't talk about enough. Lucas: That's a really good point. And it's exactly the kind of perspective we try to bring on this show. If these stories have helped you think differently about your own business or career, that's the whole goal. We deliberately keep this podcast ad-free because we want the content to speak for itself. If you find value in it and want to support that independence, you can do so at buy me a coffee dot com slash fexingo. No pressure—just a way to keep the show going. Luna: Yeah, it's a small gesture that makes a big difference for us. And it means we don't have to answer to advertisers, just to our listeners. Lucas: Exactly. So back to Henkel—one more detail I think is worth mentioning. In 2022, the company announced a new sustainability strategy that included a commitment to reduce CO2 emissions by 30 percent by 2030. That kind of long-range target is easier to set when your largest shareholder is a family that plans to own the company for another century, not a hedge fund looking for a quick exit. Luna: And that's the real legacy of the Henkel family. Not just the products, but the patience to think in generations. Lucas: Right. And that's what we can learn from them. I'm Lucas. Luna: And I'm Luna. See you next time.