Shareholder protection doesn’t appear in many hit TV shows or movies. It’s fair to say it’s not as exciting as fast cars or crime. However, the creators of the hit HBO show, Succession, have found a way to make this insurance product front and centre alongside succession planning, another core financial planning area of expertise.
In Succession, the protagonist is media magnate Logan Roy (played by veteran Scottish actor, Brian Cox). His fictional media company, Waystar Royco strongly resembles Rupert Murdoch’s News International with Disneyland bolted on. When the series begins, Logan is approaching his 80th birthday and after retaining a vice-like grip on Waystar for many years, the talk of Wall Street is all about who will succeed Logan as head of the company, something Logan has been putting off for years.
At first, Logan is determined to keep things in the family and his four children (who are all dysfunctional at one level or another) jockey for position. Then Logan has a stroke on a helicopter and slips into a coma with no plan in place immediately after making some out of character decisions and verbally changing his Will. Executives have to make decisions on who will take over at the head of the firm and prepare a statement for when trading commences in the morning.
There’s nothing written down, they don’t know whether Logan will recover, or to what extent, and a sharp drop in the share price will leave rivals sensing blood and preparing takeover bids, which becomes central to the second series.
Cue cover-ups, law-breaking, lies and industrial-scale back-stabbing.
When the penny drops
Logan Roy is a belligerent character who bullies his staff and believes himself to be virtually invincible but even he realises that he needs to step up his succession planning quickly to keep the business going and to provide surety to his nearest (and not always dearest). His shareholders begin voting against him in order to force through change and to protect their position.
Subsequently, personal relations in the family deteriorate further, creating a very enjoyable drama, but the sort of drama that would have investors fleeing if they could see what was happening.
Eventually, Logan does line up a successor (and tries to aggressively acquire other businesses) in order to satisfy investors and to prevent a hostile takeover of his own firm. It’s not a typical piece of succession planning that takes place in Wren Sterling’s line of work but it serves the same purpose.
Preventing unwanted shareholders
In Succession, the three children are suspicious of Logan’s wife, Marcia, who assumes control of his personal situation immediately after the stroke. She restricts access to him as he recovers and should he die, she stands to inherit his estate, including his shareholding, as his next of kin. He’s a majority shareholder, placing the children at risk of being cut off. They don’t know if she wants to take a place at the boardroom table or sell up and live off the billions and the matter is complicated further because Marcia is not the biological mother to the children.
With shareholder protection in place, the Roy children would have certainty of the next steps, should anything happen to their father. As Marcia doesn’t attend board meetings, there is a possibility of severe disruption to the business in the short term, however effective she might be as a director in the future. Shareholder protection would pay the business a sum of money on Logan’s death or incapacitation to replace him and keep the business going.
The businesses that Wren Sterling deals with are usually much more straight forward affairs with proper governance in place yet they’re all vulnerable to a sudden change in circumstances and subsequent uncertainty for stakeholders. When we recommend shareholder protection products, we’re seeking to prevent some of the uncertainty experienced by the Roy family and the business’ investors.
A third series of Succession is in the offing with Logan reacting to the loss of his major financial backer after a scandal in one division of the business based on historical sexual assault complaints (so very contemporary). Shareholders will need shielding from a whole new set of problems this time around, which Wren Sterling’s advisers would not be able to help them with. They need good lawyers and deep pockets for a start.
Image source: HBO