October 28, 2011
In a new blog, HR Policy Executive Vice President and Center On Executive Compensation CEO Charlie Tharp discusses the influence that sound succession planning has on executive compensation and severance arrangements, in light of recent media attention to CEO terminations. “A board’s failure to have internal successor candidates for the key leadership roles puts a company in the untenable position of having to tap the spot market for executive talent to fill senior leadership openings when they arise,” he notes. “Not only must the company pay a premium to attract external talent to fill these openings but the company often must also offer generous severance protection to entice a high caliber candidate to leave his or her current position and join the company.” The blog also notes that senior HR officers have an important role to play in the process. “CHROs can add tremendous value by helping their boards adopt a model for succession planning and encouraging the board to tailor severance arrangements to achieve talent attraction needs in coordination with other elements of the executive compensation package” as well as keeping the board current on the latest trends. Read the full article here.