JASON MANN, FORMER CEO and Vice Chairman of Life & Specialty Ventures (LSV), headquartered in Little Rock, Arkansas. LSV is a joint venture owned by six Blue Cross and Blue Shield plans and provides specialty insurance products through 14 plans. Jason was with the JV since its formation in 2005. This Water Street Insight is based on excerpts from an interview we conducted with Jason in 2015.
You have six shareholders including some that joined after the joint venture was formed. What is the secret to managing so many shareholders? How do you effectively manage the addition of a shareholder?
Jason: We actually started with two shareholders, but from the very start of the JV, our joint venture was pitched at inviting other Blue Cross and Blue Shield plans to join. As we grew the company, we always had in mind there would be more than two shareholders. Some things we did in the early days that I think helped us:
Next we tried to ensure that all the members of the JV Board were either the CEO or a direct report of the CEO of our owner companies. We had had some early experience with a couple of minority shareholders, one of the subs in years past, where we ended up getting the investment guy or finance guy. For our particular JV, we needed to have that connection to the top of the Blue Cross plan. We were able to ensure that our Board members were at the right level and actually had the power to do what we needed to get done at the parent plan.
- We tried to set the value of the contribution to the JV upfront;
- We tried not to have any special pools of business;
- We tried to create the JV to where your voting interests were equal to what you were bringing to the JV; and,
- We tried to treat all our shareholders as much the same as we possibly could.
Speaking about your best Board members, what does that person look like? What advice would you give Directors as to what they should be doing or not doing to have the most impact on the JV as a Director?
Jason: I would describe the perfect Board member as someone who is very strategic. Also, someone who has a view on the JV’s interests, understands that yes, they’re on the Board as a representative of an owner, but they’re also there as a Board member to represent the interests of the JV. Third, someone who believes in the value of the JV and understands the economics and the value equation. They understand it’s better to do this in a JV than each partner trying to do this on their own, and they understand how that delivers value. And fourth, I think it’s someone who can see the entire field. I say that because you’ve got to have Board members that represent a mix of talent – you want financial people, you want sales and marketing people, and you want perhaps an IT person – whatever your business strategy requires.
You need people who are fairly broad. You want people who can understand the economics and can see the whole field, including the competitive landscape, your competitive threats, and your opportunities. JVs tend to be in models where your Board is pretty much dictated for you (in other words, each partner is going to give this person or that, and it’s their pick). You want to get ahead of that as much as you can (with either your full Board Governance or Nominating Committee) by trying to outline what kind of Board members you are looking for. Get the parent companies to adopt a profile so that when you get to the point where you are having somebody retire, or perhaps somebody is taking over the responsibilities and you’re going to get a new Board member, you’re not having to fight that battle then.
What has been the single most impactful thing that your JV has put in place in terms of Board effectiveness?
Jason: We were very fortunate to transition into getting an independent Chairman. Our Chairman is independent and he doesn’t represent any of the shareholders directly. That has been very helpful. It just happens that this guy is a fantastic Chairman so that’s helped, but also I think his independence – he is representing LSV, not necessarily any of the owner plans – is important.
The last thing I’d say is don’t overlook the importance of social time for Board members. A lot of our Board members know each other through LSV. They don’t normally run across each other in other forums other than maybe once a year. We have found that doing our committee meetings the day before the Board meeting, taking the Board members all to dinner, and giving them some social time to really get to know each other – that has been very productive for us in building trust among the shareholders and the members of the Board.