Succession Planning
Reassuring investors with disclosure. CEO succession has been near the top of business news cycles lately – especially following the news that Jeff Bezos is stepping down as Amazon’s CEO. 08 February 2021
Lynn Jokela, Associate Editor of TheCorporateCounsel.net, has referrenced SquareWell’s latest Progress Group report on succession planning “Who Should Lead the Organization?” as well as statistics from SquareWell’s study on “CEO Dismissals and Appointments”.
CEO succession has been near the top of business news cycles lately – last week’s news about Jeff Bezos stepping down as Amazon’s CEO certainly played a part. One key board responsibility relates to CEO succession planning. Investors expect boards to have a plan and when the need arises – to appoint a new CEO in due course. As boards need to deal with views of multiple stakeholders, one dilemma is what board should say to investors and a SquareWell Partners report says it found only 20% of companies that have appointed a new CEO since January 2019 provided comprehensive disclosure of their succession planning process.
Some companies aren’t in a position like Amazon – where the company’s announcement named Andy Jassy as incoming CEO. Jassy reportedly previously described himself as Bezos’ shadow – and the announcement also said Bezos will transition to executive chairman. To underscore the importance of CEO succession planning, the SquareWell report cites research that found companies that are unprepared to appoint a successor in a timely manner lose on average $1.8 billion in shareholder value. The report notes, when it comes to succession planning, it’s understandable that companies may want to hold their cards close to the vest, but investors want reassurance that boards are ready to act.
You can access the article here.
