TORONTO — Frank Stronach plans to step down as chairman of Magna International Inc. (TSX:MG) after the company’s annual meeting this year.
Stronach, who is standing for re-election as a director, will be given the title of founder and honorary chairman, the company said in its management proxy circular.
“This is a significant change in the ongoing evolution of Magna, but we are fortunate to still have the continuing benefits of Frank’s insight and advice,” Mike Harris, Magna’s lead director and former Ontario premier, wrote in a letter to shareholders inviting them to the annual meeting.
In a message to shareholders in the company’s annual report, Stronach said the company was in good hands.
“It is therefore the right time for me to step down as chairman, a position I have held for nearly 40 years,” he said.
“The key members of Magna’s executive management are seasoned, widely respected within the automotive industry, and committed to the principles that have made Magna a great company.”
Stronach became one of Canada’s richest people by creating Magna and building it into one of the world’s largest suppliers of auto parts. The Austrian-born entrepreneur and his family trust long controlled the company through multiple-vote shares, but gave up control last year in exchange for about $1 billion in cash and shares, as well as control over a joint venture that will develop components for electric vehicles.
He still owns or controls about 10.6 million Magna shares and 2.7 million options.
Stronach, 78, will continue to serve as a consultant to the company, a role that rewarded him handsomely in 2010 when the company reported a profit of $973 million. Stronach was paid a bonus of three per cent of the company’s pre-tax profits in 2010, but under a deal signed last year, that is expected to be reduced to two per cent by 2014.
Stronach earned a total compensation package worth $60 million last year including a salary of $200,000, $16.5 million in option-based awards, a nearly $40.7-million cash bonus and $2.6 million in other compensation.
That compared with a total compensation of about $2 million in 2009 when Magna reported a loss of $493 million.
Magna chief executive Donald Walker earned a total package worth $15.7 million for 2010, compared with a package worth $5.5 million in 2009.
Earlier this year, Stronach and other top shareholders agreed to give up control of MI Developments, the real estate company that owns many of the factories used by Magna.
Under that deal, MI Developments (TSX:MIM.A) agreed to transfer ownership of a number of U.S. horse race tracks as well as the associated real-estate and gaming business to Stronach as well as about $20 million in cash to operate the business.
Magna’s annual meeting is scheduled to be held on May 4 in Markham, Ont.
Shares in the company were down 37 cents at $46.82 on the Toronto Stock Exchange on Thursday.