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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