Tag Archive: governance metrics

NACD Insight & Analysis for September 17, 2010

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Recently, interim CEOs have found themselves in the media spotlight.

This week, the Fortune magazine article “Should CEO be a Team Job?” notes that interim CEOs could be found at companies such as Borders, Sara Lee, and GM, while the boards searched for appropriate replacements. Though an interim CEO may be part of an “emergency” succession plan, boards must prepare to fill leadership roles when needed. Three to five years before a CEO transition is expected, the board should begin to develop long-term succession plans.

CEO Succession Planning - NACD According to the 2010 NACD Public Company Governance Survey (available Oct. 2010), most boards have taken the necessary steps to prepare for an abrupt CEO departure:

  • 70% include development of internal candidates
  • 69% include plans to replace the CEO in an emergency
  • 57% include long-term succession planning (three to five years before an expected transition)
  • 21% include engagement of an executive search firm to identify external candidates

To continually ensure that the current leadership is meeting the needs of the company, directors should engage in CEO succession planning. Well-timed transitions to new leadership enhance long-term shareholder confidence and value.