Advisory Council Reports

The Board’s Role in a New CEO Transition

By NACD Staff


Advisory Council Brief

The transition period marked by the departure of one CEO and the arrival of another is one of the most important in setting up the incoming CEO for success. In fact, according to data from the 2017–2018 NACD Public Company Governance Survey, CEO succession ranks as one of the five most critical areas for board improvement in 2018.

1 Yet in a survey from Heidrick & Struggles and Stanford University, nearly 50% of companies reported they did not have a formal transition plan for a new leader.2 Similar research indicates that the vast majority of such plans are only about a week in duration.3 As employees, investors, and other constituents continue to hold chief executives to a higher standard, the board’s role in not only selecting the right candidate to serve as CEO but also planning for a successful transition is more vital than ever.

On March 13, 2018, NACD, Heidrick & Struggles, and Sidley Austin LLP cohosted a meeting of the NACD Nominating and Governance Committee Chair Advisory Council.4 At the session, nominating and governance committee chairs from Fortune 500 company boards discussed key issues and effective practices associated with the board’s role in transitioning in a new CEO.

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