Succession planning: Passing on the corporate baton

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Succession planning: Passing on the corporate baton

Companies headed by iconic figures often have a hard time sussing out whom to pass the leadership baton to.
Tom Merton | Getty Images

The abrupt resignation Sept. 26 of Equifax CEO and chairman Richard Smith, 57, highlights the wisdom of any company having an executive succession plan in place. Generally well regarded before news broke of an unprecedented security breach at the credit-reporting agency earlier this year — and, worse yet, the sale by three top executives of Equifax stock before the public was advised of the leak — Smith had been with the company 12 years and wasn't expected to leave anytime soon. Still, replacing him will be a matter of faculties and not familiarity to the public. When a former corporate leader is a well-known public icon whose image is intimately tied to, or conflated with, the company's, the task can be exponentially more difficult than the one Equifax faces now.

CNBC takes a look at five business icons whose departure — past or future — from the firms they founded, financed or finessed have either posed succession-planning headaches for shareholders and boards or spurred them to designate and insinuate their heirs themselves.

— By CNBC's Kenneth Kiesnoski
Updated 26 September 2017. Originally posted 12 June 2014

  • Warren Buffett & Berkshire Hathaway

    Now 87, billionaire investor and philanthropist par excellence Warren Buffett remains at the helm of Berkshire Hathaway as chairman, CEO and largest shareholder. It's hard to imagine who might succeed the media-savvy "Oracle of Omaha," whose multinational holding conglomerate includes such companies as Dairy Queen, GEICO and Fruit of the Loom.

    Buffett himself is actively involved in vetting his own successor(s) and told CNBC in a 2014 interview that he hasn't been looking too far afield for candidates. "The successor will come from within Berkshire [Hathaway]," he said. "We have so many businesses [that] we have a shot at evaluating a lot of talent."

    Buffett pointed to portfolio managers Todd Combs and Ted Weschler — both of whom outperformed both the S&P 500 and Buffett himself in 2013 — as key in his succession plans. "I think we're well equipped for the next century," he said. "Those two can handle it."

    Warren Buffett
    Adam Jeffery | CNBC
  • Steve Jobs & Apple

    Apple personified, erstwhile chairman and CEO Steve Jobs was synonymous with the brand of the technology empire he co-founded with Steve Wozniak back in 1976. Enigmatic and enterprising, Jobs was regarded as one of the leading pioneers of not only Apple but the personal computer industry, in general. Although he resigned from Apple under pressure in 1985, by 1997 a struggling Apple had rehired Jobs via the acquisition of rival NeXt, which he'd founded in the interim. Revived profitability and a flood of now iconic products — from the iMac and iPod to the iPhone and iPad — followed. Jobs was so integral to Apple's image that when he finally resigned as CEO in 2011 due to rapidly failing health, shares immediately dropped 5 percent.

    Having struggled with bouts of cancer since an initial diagnosis in 2003, Jobs turned to Apple executive Tim Cook, widely credited with the company's fiscal turnaround, to serve as interim CEO when he was on medical leaves of absence. In 2009, Cook — by then chief operating officer — was handling day-to-day operations and was formally named CEO in 2011, with Jobs' assent, after the latter had resigned to serve as chairman of the board while convalescing. Since Jobs' passing later that year, Cook has become Apple's new public face and has been busy putting his own stamp on the brand, with multiple new product revisions and rollouts and an emphasis on increased charitable and ecological philanthropy.

    Steve Jobs
    Getty Images
  • Bill Gates & Microsoft

    The PC industry's VHS to Steve Jobs' Betamax, billionaire philanthropist Bill Gates — co-founder and former chairman and CEO of Microsoft — is also intricately interwoven, in the world's collective consciousness, with the firm he built. Gates, however, has been intentionally steering his own slow departure from Microsoft for about a decade and a half now. He resigned as chairman of Microsoft's board of directors in February 2014, the culmination of a disengagement process that arguably began with his founding of the Bill & Melinda Gates Foundation in 1997 and continued with his resignation as CEO in 2000 and his move to part-time work at Microsoft as of mid-2008. Trusted colleagues and fellow board members have assumed many of his duties over the years. Insider and reputed Gates acolyte Satya Nadella, former executive vice president of Microsoft's Cloud and Enterprise group, was named CEO in February 2014 after a six-month search, replacing Steve Ballmer.

    One of the world's wealthiest individuals, Gates has turned to full-time philanthropic work through his foundation. He has not, however, completely abandoned Microsoft. He remains an active board member and now serves as a "technology advisor" — a return, perhaps, to his computer-programming roots.

    Bill Gates
    Getty Images
  • Ned Johnson & Fidelity Investments

    Despite their size, some multinational companies still bear resemblances to humbler mom-and-pop operations — at least when it comes to succession planning. Fidelity Investments and the Johnson family, for example, go together like, well, mom and pop. Founded in 1946 by Edward C. Johnson II — father of former chairman and CEO Edward "Ned" Johnson III and grandfather of Abigail Johnson, who now holds her father's positions — the financial services corporation is still 49 percent owned by the family, through both individual holdings and trusts. The remainder of shares is largely held by other Fidelity employees and the Johnsons, and their proxies keep a legendarily tight grip on operations.

    It was long widely assumed that Ned Johnson, 87, envisioned daughter Abigail, now age 55, eventually taking his place. "Keeping it in the family" can lend private companies like Fidelity — though profitable and one of the world's largest mutual fund and financial services firms — a reinvigorated sense of stability and continuity in a still-rocky recovery economy.

    Essdras M Suarez | The Boston Globe | Getty Images
  • Martha Stewart & Martha Stewart Living Omnimedia

    What to do with a firm like Martha Stewart Living Omnimedia once its namesake's no longer alive? The media and merchandising company's eponymous founder and chairwoman is a hale and hearty 76 years young, but the conundrum faces any firm whose brand incorporates its founder and public face's actual name and/or identity. But MSLO has already had to make do without Martha once before: As a result of her conviction in the ImClone insider trading scandal of the early 2000s, Stewart was forced to resign as president, chairwoman and CEO and barred by the Securities and Exchange Commission from doing business at the company until the end of 2011.

    Stewart doesn't seem interested in discussing succession plans now that she's back in business. As reported on CNBC in 2014, "Stewart is back on MSLO's board as nonexecutive chair and shows no sign of slowing down. Martha Stewart the company, Martha Stewart the brand and Martha Stewart the person are inseparable." Who succeeds the force of nature that is Stewart, and when, remains to be seen.

    Martha Stewart
    Getty Images