A Little Family Enterprise Planning Goes a Long Way
When you own a family enterprise choose your fiduciaries carefully and communicate with key stakeholders. Some people keep their plans a secret. That makes “the day after” a lot harder on everyone.
According to a New York Times article by Katherine Rosman and Elizabeth Harris, M. Richard Robinson, Jr., the 84-year-old Chairman and CEO of Scholastic Books (the son of the founder), died suddenly while taking a walk with his sons and former wife on Martha’s Vineyard. Scholastic Book’s general counsel called Iole Lucchese, an employee who had worked in the company for 30 years and a senior executive, to tell her that Mr. Robinson had left the Class A voting shares (the controlling interest of the company, all held in Trust) to her in his Will, bypassing his sons.
Board members were shocked. David Wallack, a portfolio manager for T. Rowe Price, Scholastic’s largest investor (after the family), was not aware of the succession plan, and when he had asked Mr. Robinson if there was one, he replied that there was an envelope in the safe. When opened, it would show his wishes. Mr. Wallack had never met Ms. Lucchese, who put a new management team in place. His sister is reported as saying that the company is in good hands.
Seeking professional support can alleviate the initial fear in beginning these conversations with your family and business team.
Some of this shock and confusion could have been avoided. Having conversations today about the future will help alleviate tension, fear, or uncertainty. Ensuring that stockholder’s know your plans and that you have through documentation of your desires will ensure followthrough of your wishes.