4 Business-Related Errors In “Succession”

On the popular HBO series “Succession,” the beats of a proxy conflict may occasionally be just as powerful as a cunning betrayal from a once-faithful lackey.

The four seasons of the show have developed a thesis about Logan Roy, the media tycoon who founded the fictional news and entertainment conglomerate Waystar Royco, and his all-pervasive gravitational pull. In spite of their desperate attempts to win his favour, we’ve seen Roy thwart corporate raiders, pursue smart acquisitions, and defeat his children’s attempts to get him fired from his business.

Legal experts remarked that while the show successfully captured the stress and stakes surrounding the struggle for control of a significant public business, it occasionally strayed from accepted corporate governance practises.

No one from the show was available to comment before publication, according to a spokeswoman for HBO.

According to experts, the show does the following four things incorrectly:

A person like Logan Roy would be subject to greater control by the board of a public firm.
The board is seen more or less trembling in Logan’s presence in Season 1, when Logan’s son Kendall Roy orchestrates a disastrous “vote of no confidence” against his father. Logan quickly reports his son’s defeat and then proceeds to oust the members who voted against him, possibly with good reason.

According to Kai Liekefett, a partner at Sidley Austin and an authority on corporate governance concerns, a vote of “no confidence” isn’t exactly something you’d see in a corporate boardroom.

“That’s a term of art that’s used in politics, more so than in the corporate world,” he remarked.

He continued that it doesn’t seem plausible that Logan could just dismiss board members who disagreed with him.

The CEO cannot remove the board; rather, it is the other way around, according to Liekefett.

Legal authorities concurred that Waystar’s board was portrayed as being less realistically subservient to the CEO of a significant corporation.

“Part of this is about the internal dramatic dynamics of the show — the kind of tyrant that he is in his family—that we then see reproduced in the business setting,” said Diane Kemker, visiting professor of law at the DePaul University College of Law and the Southern University Law Centre.

But the first thing to note, she continued, “is the board’s complete lack of any succession planning.”

Kemker is also one of the people behind the mock syllabus for a seminar for law professors on legal matters related to “succession,” according to the source.

In real life, that shareholder meeting from Season 3 would have been really uninteresting (and Shiv couldn’t have simply gotten herself a board position).
According to corporate law experts, shareholder meetings are frequently quick, pointless gatherings with barely any surprises. Additionally, weeks prior to the meeting, vote totals usually start to come in.

But in Season 3, Stewy Hosseini, everyone’s favourite turtleneck-wearing private equity investor, leads a side against the Roys in a nail-biting proxy fight that is the episode’s focal point.

Frank Vernon, COO of Waystar, makes feeble attempts to impede the progress of the settlement talks between the two sides. High-stakes settlement discussions, however, almost never take place during such a vote, according to attorneys.

Shiv Roy, Logan’s daughter, eventually strikes a deal to gain a board seat, which brings the drama to an end. This is also a stretch because agreements must be approved by the board and supported by written agreements, according to experts.

“In practise, a mere last-minute handshake deal would probably not happen and would not be enough to resolve the proxy contest,” Rebecca Van Derlaske, an attorney at Olshan Frome Wolosky LLP and an advocate for activist investors, said.

Where are the investment bankers and lawyers?
The three guys engage in a mental game in Norway when Kendall and brother Roman Roy attempt to sabotage a contract with the eccentric tech founder Lukas Matsson in Season 4. They toss out figures for the cost of Waystar. By the end of the episode, Matsson appears to have put an end to the discussion with an offer of $192 per share after they had tossed around $144 and $187 per share.

But these days, conversations between a few top executives wandering around picturesque fjords aren’t the only way that transactions and bids are concluded. According to Anat Alon-Beck, a law professor at Case Western Reserve University who specialises in corporate law, the board, lawyers, and bankers are closely involved in choices regarding pricing, soliciting competing offers, and creating thorough documentation around bid proposals.

The problem, according to Alon-Beck, “is not just throwing out numbers, but the fact that that’s not where it usually ends.” There must be a procedure for that.

A board must now consult specialists before accepting the figures that the CEOs offer them. She said the company’s chief financial officer and investment banker would do the math and attempt to elicit competing bids.

“You need to have both internal and external evaluations of the offer,” Alon-Beck added. There are gatekeepers in these transactions, but on the broadcast, they were absent.

Alon-Beck remarked, “Maybe we’ll see them later, but for now we haven’t seen them.