Success at the Top: CEO Evaluation and Succession

The stakes of CEO evaluation and succession are high. Executive leadership is integral to the prosperity of any corporation. The right CEO and team can inspire a lackluster organization to greater achievements, while mediocre leadership is lucky to maintain the status quo.

Because the core principles of CEO evaluation and succession are interrelated, we have constructed this handbook as a series of modules. The first two modules focus on process: Module One contains an overview of the performance evaluation, and Module Two discusses CEO succession planning. 

The focus on the board’s compensation committee has never been sharper. The components of compensation plans and the link between compensation and company performance are under intense scrutiny from shareholders, employees, policymakers, the media, and other stakeholders. The Report of the NACD Blue Ribbon Commission on the Compensation Committee revisits NACD’s 2003 Report of the NACD Blue Ribbon Commission on Executive Compensation to highlight the new environment in which compensation committees—and, more broadly, boards—are now operating. It recommends that the compensation committee and board work together to establish an executive compensation philosophy that supports the company in creating long-term, sustainable value.

The report includes ten specific recommendations for compensation committees to consider when evaluating their compensation philosophies. It also provides practical tools, such as sample compensation committee charters, a compensation committee assessment, and guidance on executive employment contracts.