It is only relatively recently that the task of actively managing the CEO’s succession has become recognized as a foremost priority for U.S. boards. With some notable exceptions, many boards are falling short of their responsibility to plan rigorously for a smooth transition at the top.
A number of factors have combined to bring the issue of leadership succession to the fore. First, corporate governance reforms have raised the level of accountability for executives and independent directors alike, making it harder to survive a period of poor performance. Second, these same reforms have empowered shareholders to take a more active stance against management failings and boards that fail to rectify those failings. Third, the primacy of the CEO in the boardroom has been lessened by the emergence of the lead independent director and, in certain cases, by the appointment of a separate chairman to lead the board. These factors have made the CEO far more vulnerable than in the past.
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