Why Succession Deserves the Same Vigilance as Strategy and Risk

The succession planning clock is ticking, and treating it as an annual exercise is no longer enough.

If you ask a board what its core responsibilities are, succession planning will be at the top of the list alongside strategy and risk oversight. However, if you ask how succession planning is handled, directors’ responses are very different from how they describe their oversight of strategy and risk. Typically, boards build a succession plan, send it to the nominating and governance committee, committee members sign off on the plan, and then it is filed away until the next year.

Boards often revisit strategy and risk at every meeting and stress-test both items against new information that comes in. Succession planning, however, doesn't usually receive that same level of attention. It is often delegated to one or two board meetings per year. That has always been worth fixing, but it matters more now as the average age of CEOs rises and many CEOs and chief financial officers (CFOs) move closer to retirement at the same time.

The Demographics of Succession

Cowen Partners Executive Search conducted an analysis in June 2026 of CEO and CFO ages. The analysis used proxy data across a sample of fifty S&P 500 companies. Forty-two percent of the CEOs in that sample are 60 years or older, with an average age of 59; 16 percent are ages 65 or older with no CEO succession plan disclosed in their companies' proxy filings.

Additionally, in 2025 Fortune found that about 41.5 percent of CEOs in the Russell 3000 are at least 60 years old, up from 35.1 percent in 2017.

One-quarter of the CFOs in Cowen Partners' analysis are within five years of retirement. One-third of the combined CEO and CFO seats in that sample simultaneously fall inside that same retirement window. That translates to a large part of the internal succession bench being tested all at once, with the person who'd normally help steady a new CEO potentially heading out the door alongside the exiting CEO.

The nominating and governance committee should ask a different question: Does the internal successor that the board is considering actually have the experience a transition demands, rather than just the tenure or proximity to the role that made him or her visible to begin with? That's a harder conversation to have in a regular board meeting, but it's better to have that discussion prior to a transition.

External CEO hires at S&P 500 companies increased from 18 percent in 2024 to 33 percent in 2025, the highest share of CEO successions in eight years. That trend pushed internal promotion rates below 70 percent. Boards may go outside the company for a CEO when the internal bench doesn't have the skill set the role requires.

Underpinning this shift toward external CEO hires is the fact that boards may easily lose sight of the time it takes to build the skills an individual needs to become CEO. When considered against a peak departure window projected to occur between 2029 and 2034, plus the 10 to 15 years it can take to rebuild a depleted internal leadership pipeline once that gap opens, the urgency for succession planning makes a lot more sense. The decisions that matter are the ones being made—or not—in board meetings over the next two or three years.

Bolstering Succession Planning

Boards don’t need to reinvent how they conduct succession planning, but they should sharpen the following two habits:

Extend succession planning one layer deeper than the CEO seat. Boards should treat CFO succession as part of the CEO succession planning process and on the same timeline. The CFO is often a leading internal candidate for the CEO role and the executive a new CEO relies on most to keep the business steady through a transition. When both seats turn over in the same window, the board loses continuity on both sides of that transition.

Pressure-test the developmental timeline assumptions against retirement data. A name on a succession chart is just a starting point. The question worth asking is whether that person has the kind of experience the role requires or whether the chart reflects convenience more than readiness.

In practice, that means mapping each potential successor's experience against what the role will require and the time remaining before an expected transition. Where the gap is too wide to close in time, the board can accelerate development now or widen the search to external candidates before a departure forces the decision.

Boards that treat CEO succession planning as a standing agenda item rather than an annual filing exercise over the next two to three years will be able to oversee orderly transitions when the time arrives. The ones that don't will manage succession under pressure and on a timeline they didn't choose.

The views expressed in this article are the author's own and do not represent the perspective of NACD.

Cowen Partners Executive Search is a NACD partner, providing directors with critical and timely information, and perspectives. Cowen Partners Executive Search is a financial supporter of the NACD.