Good morning. The abrupt resignation of a board member is a memorable occasion for a CEO—and even more so if all of the independent directors on the board quit at the same time. That actually happened last month to Anne Wojcicki, the CEO and cofounder of 23andMe, a genetic testing company. But on Tuesday, the company announced three new independent directors, and all are former finance chiefs.
At the genetic-testing company, there was some turmoil between Wojcicki, who wanted to buy the public company and take it private, and the former seven independent directors.
“We differ on the strategic direction for the company going forward,” the directors wrote in a public letter to Wojcicki in September. Roelof Botha, a managing partner of Sequoia Capital, and Neal Mohan, CEO of YouTube, are among the notable executives who stepped down.
23andMe went public in 2021. However, the company’s valuation dropped from a brief high of $6 billion in 2021, to under $150 million. The board had formed a special committee to evaluate the proposal by Wojcicki, who controls 49.75% of the company’s voting rights, and told the board she would not accept third-party bids, Fortune’s Lila MacLellan recently reported.
Some of the troubles that MacLellan recounted: The consumer testing business had slowed, there was a massive data breach, and a drug discovery business that drained the company’s resources before it was finally shut down. Earlier this month, MacLellan talked with Wojcicki in her first on-the-record interview since the directors resigned. You can read the article here.
‘Making the company profitable’
On Tuesday, Wojcicki announced the new additions to 23andMe’s board: Andre Fernandez, a former CFO at WeWork, Inc., and NCR Corporation; Mark Jensen, a former CFO at Redleaf Group; and Jim Frankola, a former CFO at Cloudera, Inc., and Yodlee, Inc.
“I am excited to welcome these three experienced directors to the 23andMe Board, and looking forward to working with them,” Wojcicki said in a statement.
The new directors were likely chosen with the view that 23andMe’s financial difficulties are similar to the challenges they faced as CFOs at their former companies, Eleanor Bloxham, CEO and founder of The Value Alliance and Corporate Governance Alliance, told me.
“23andMe has never turned a profit, and the company is struggling to develop a sustainable business model,” Rick Warne, professor of accounting at the University of San Diego’s Knauss School of Business, told me. “Directors with CFO backgrounds can help the company develop a plan to generate positive cash flow with the goal of making the company profitable.”
23andMe’s stock has performed poorly since its IPO, Robert Prilmeier, professor of finance at Tulane University’s Freeman School of Business, said. “In this context, a likely motive for choosing directors with financial expertise would be to try to shore up shareholder confidence in the protection of their interests going forward,” Prilmeier said.
In general, CFOs bring along financial expertise that can help a board better evaluate whether the management team is following a path that maximizes shareholder value, he added.
Fernandez, Frankola, and Jensen have been appointed to serve as members of the audit committee and compensation committee. Fernandez is chair of the audit committee, Jensen is chair of the compensation committee, and also the board’s lead independent director.
As CEO, Wojcicki will indeed need to forge a strategic partnership with the former CFOs to help 23andMe fight the odds.
Sheryl Estrada
sheryl.estrada@fortune.com
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Leaderboard
Jay Stasz was named CFO of Planet Fitness, Inc. (NYSE: PLNT), effective Nov. 15. Stasz will join the company on Nov. 4 and work with current CFO Tom Fitzgerald until assuming the role. Stasz has 25 years of experience. He most recently served as CFO at Savers Value Village. Before that, he was CFO at Ollie's Bargain Outlet.
Christoph Brackmann was named CFO at Novocure (Nasdaq: NVCR). Brackmann will join Novocure as a senior financial advisor and will transition to the role of CFO on Jan. 1 when the current CFO, Ashley Cordova, becomes CEO. Brackmann joins Novocure from Moderna, Inc. where he served as SVP of finance since 2019.
Big Deal
Global professional services firm RGP has released new research on how workforce strategy decisions for U.S. companies are impacted by ongoing labor market challenges, growing digital transformation spend, and the Fed’s September interest rate cut.
More than half of financial decision makers (51%) polled after the Fed’s September meeting expect their company to increase some investments before the end of 2024. Meanwhile, 81% expect to increase investments by the first half of 2025. If a lower interest rate environment were to unlock new capital in 2025, respondents named business process optimization and automation as the top areas of increased investment, followed by digital transformation and AI, according to the report.
The findings are based on a poll of 204 executives at the director level or above who influence finance decision-making at organizations with $500 million or more in annual revenue.
Going deeper
In a new Wharton Business Daily podcast, Wharton professors Mike Useem and Harbir Singh discuss their book, Resolute Japan, which explores how Japan’s corporate leaders are focusing on the long term. The Japanese stock markets have in recent years rebounded after three decades of sluggish performance. The professors discuss a new hybrid leadership model that has helped Japan’s corporations to make a comeback.
Overheard
“It’s become part of the identity of our company and it’s unleashed this revolution of wellness inside our company.”
—Tata Consulting Services (TCS) Global Chief Marketing Officer Abhinav Kumar told Fortune in an interview. TCS has been the title sponsor of the New York City marathon for 10 years. The company is now worth $19.2 billion, up almost ninefold from 2010, thanks in large part to growing awareness of the name.
