Google cofounders Larry Page and Sergey Brin this week announced that they will leave their roles as Alphabet CEO and president, respectively, but will remain on the company’s board. Sundar Pichai will serve in a dual role, succeeding Page as chief executive of Alphabet while remaining CEO of Google. Pichai also sits on Alphabet’s board. The position of Alphabet president will be eliminated.
The leadership changes, effective immediately, occur as Google’s valuation growth slows compared to its Big Tech peers. Alphabet shares have increased 25 percent since this time last year, whereas Microsoft has seen a 54 percent increase and Apple a 70 percent increase. Google, among other tech companies, has come under fire over questions about transparency, data use, and privacy policies. Considering these pressures, the apparent suddenness with which Brin and Page made their departures public spurred myriad reactions. The Financial Times, for one, argued that the pair had already removed themselves from day-to-day management when they became the leaders of Google’s holding company. Brin and Page together possess a controlling 51 percent of a special class of Alphabet shares.
Pichai came to Google in 2004 and made a name for himself after pushing the founders to create what ultimately became Chrome, the most-used Internet browser today. He was named CEO of Google in 2015 at the same time that the holding company was formed and Page assumed the chief executive role and Brin the president role. According to the blog post by Page and Brin in which they announced their departures, “it’s the natural time to simplify our management structure. We’ve never been ones to hold onto management roles when we think there’s a better way to run the company.”
“Today, in 2019, if the company was a person, it would be a young adult of 21 and it would be time to leave the roost,” Brin and Page quipped. “While it has been a tremendous privilege to be deeply involved in the day-to-day management of the company for so long, we believe it’s time to assume the role of proud parents—offering advice and love, but not daily nagging!” Shares in Alphabet increased by 0.6 percent on the evening of the announcement.
Implications for Boards: In a tumultuous year for CEOs, with the heads of major companies such as eBay, Juul Labs, McDonald’s Corp., Under Armour, and WeWork, having left their roles, boards must dedicate sufficient time to one of their most fundamental duties: CEO succession planning. Directors should understand their company’s current state of business—be it stumbling through times of trouble or powering through success—as well as strategic goals for the future of their company, and determine whether they align with their CEO’s abilities and strengths. Establishing a talent pipeline, understanding company strategy, and questioning whether or not your chief executive is fit for the future of the organization are key actions boards must take to ensure both smooth transitions and constant innovation. With the trend of founder-CEOs, particularly in the tech sphere, leaving their roles as an example, boards must ensure their plans for CEO succession consider how these departures might change the company’s culture and open the playing field to new competitors.
Key Questions Directors Should Ask:
NACD Resources: The report from the NACD Nominating and Governance Committee Chair and Risk Oversight Advisory Council on CEO Succession Planning discusses leading practices in the field and how to plan for related succession risks. Our CEO Succession Planning and Talent Oversight learning center also contains tools for directors overseeing talent management in the C-suite and what that means for the organization’s broader workforce. “Think CEO Progression, Not CEO Succession,” an article featured in NACD Directorship’s March/April 2019 issue, proposes curating potential C-suite candidates further down the pipeline than two or three roles so that these candidates are identified and prepared should the company need them to step into the top position.