HBO’s Succession television series delivers intense psychological drama sprinkled with dark humor as it covers the Roy family, shareholders, and officers of fictional, publicly traded Waystar/RoyCo, a global media, and entertainment conglomerate, in the struggle over who will assume control of the company when (and seemingly if) family and company patriarch Logan Roy decides to step down as CEO. While watching the Roy family members take calculated maneuvers to undermine each other and rise in the ranks of the family/company hierarchy, legal alarm bells should be ringing – or at least they are for us nerdy lawyer viewers. Below are a few lessons you can take from the show to avoid these issues in your company.
Hostile Work Environment
Several workplace relationships at Waystar are beyond toxic, hostile, and disturbing. Roman, Logan’s youngest son and Co-COO of Waystar, continually makes sexual advances toward Gerri Killman, Waystar’s General Counsel (verbally and by sending elicit pictures). Tom Wamsgan, Logan’s son-in-law and leader of the cruise and global news departments at Waystar, makes Greg Hirsch, grandson of Logan’s estranged brother and shareholder, his executive assistance and, in practice, his minion and scapegoat. And, Logan appears to be in a sexual relationship with his assistant.
Any unwelcome conduct on the basis of a protected class may give rise to a hostile work environment. While appearing broad in theory, a line exists between petty slights and annoyances on the one hand and consistent vulgar comments or racial slurs, yelling and ridiculing employees, and quid pro quo propositions on the other.
A harasser can be a supervisor, a co-worker, or a non-employee. Although Roman is younger and in a junior position to Gerri, Roman is not safe from a potential hostile work environment claim because of his age or position.
Companies should clearly communicate that harassing conduct will not be tolerated to protect against these claims and a hostile culture in general. A confidential grievance process should be in place; anti-harassment training should be mandatory for supervisors and employees; and upon receiving a complaint, an immediate investigative action should commence.
If public allegations of sexual assault against an employer arise, the employer should not attempt to hide and cover up complaints made by employees, such as when Tom and Greg destroy evidence of sexual misconduct complaints made by cruise ship employees. Succession is a reminder that even if temporarily buried, bad acts can appear at any time causing even greater problems than when the bad act actually occurred.
Government Investigations
In Season 3, Kendall, Logan’s oldest son and Co-COO, testifies in front of Congress that Waystar is covering up a sexual assault scandal. The Department of Justice (DOJ) issues a federal subpoena to gain additional information about the allegation, which Logan ignores and attempts to persuade White House personnel for assistance in squashing the DOJ investigation (including instructing the general counsel to make calls to her contacts and make it go away). Eventually, the FBI raids Waystar’s offices late at night, forcing the company to cooperate.
The DOJ is the agency empowered to enforce the federal law of the United States. The DOJ becomes involved when there is an interest by the United States to prosecute a criminal matter. The DOJ also has the FBI at its disposal for assistance with investigations and enforcement. Therefore, when the DOJ initiates an investigation into a company, things are officially serious. Unlike Waystar, a business should not attempt to bribe its way out of an investigation, ignore federal subpoenas, doctor and/or destroy documents relevant to an investigation, or falsely posture a fall guy for any criminal or unethical behavior because when the DOJ is investigating criminal matters, prison time may be on the line.
Ignoring a criminal investigation on any level, like Waystar attempts, is never a strong strategy, but investigations into civil matters, for example, by the SEC, or by a state regulatory agency, like the Texas State Securities Board, are less serious in terms of consequences.
Fiduciary Duties
At the beginning of Season 3, when before Congress Kendall accused Logan of covering up Waystar’s sexual assault scandal, Waystar took no official action regarding the accusations. Instead, Waystar fires the whistleblower (Kendall). While Kendall believes he was acting in the best interest of the company, he is quickly notified by his press secretary that he not only opened the company up to potential lawsuits and other liabilities, but further, he violated his duty of confidentiality and fiduciary duties as a director.
Board members, officers, and control shareholders, each have certain fiduciary duties to the company. The mere ownership of shares cannot vitiate lawful fiduciary duties, such as good faith and fair dealing, loyalty, care, and to act lawfully. If a situation arises similar to this in your company, the following actions should be taken: 1) the officer in question should be immediately suspended from any corporate position; 2) independent board members should convene a special meeting and authorize an investigation into the matters in question; 3) the investigation should be conducted by an outside law firm (not the general counsel who may be having an affair with the Co-COO and may have had a prior relationship with Logan, the accused); and 4) a single, non-interested board member or officer should be given sole authority to speak to any outside entity.
Mergers & Acquisitions
During Season 3, Waystar seeks acquisition targets to bolster its bottom line, distract the on-going criminal investigation, and fend off a potential hostile takeover while the share price is trading at a low value. Waystar ultimately selects a target, and the season concludes when the target flips the script and makes an offer to acquire Waystar. The Roy family children (and directors) are immediately concerned about what would happen to them if the deal goes through and decide to vote against Logan and take him out (the deal appears to need their vote). Logan is one step ahead and has already secured enough votes by acquiring the Roy children’s mom’s vote.
Companies often engage in acquisitions and divestitures to increase value. When a company engages in merger and acquisition discussions, it is imperative that the company’s interests are placed first. Officers and directors are not allowed to place their respective personal outcomes ahead of the company even if they are shareholders. The Board must control the process. A special committee of disinterested directors should run the process, and interested officers, while necessary for the deal, should not have ultimate control of negotiations or final say in the terms.
In Succession, Gerri, the General Counsel, is the only officer or director who seems to understand her obligations. When asked by Roman to help stop Logan, Gerri responds, “I am focused on whatever outcome best serves the financial interests of the shareholders of the company.” That is solid legal advice that everyone should follow.
Jeffrey Cash is a partner and deals attorney with Bell Nunnally in Dallas.
Sydnie Shimkus is an associate with Bell Nunnally, focusing on commercial litigation and employment.
