Mind the Middle: Executive Succession Below the CEO
While directors remain relatively calm about unplanned CEO departures, concern is spiking for the executive tiers below, reveals a new Farient Advisors study.
58% of directors flagged a high risk for an unexpected departure among the CEO’s direct reports - up sharply from 45% last year.
Unease continues down the ranks: 53% feel similarly for one to two levels below the C-suite, compared to 43% in 2023.
Only 6% of directors see unplanned CEO exits as a major risk — down from 8% last year — despite a wave of high-profile CEO changes.
Nearly half (46%) say these shakeups have sparked new conversations about turnover and succession at the board level.
Surprisingly, nearly 20% would start fresh with an external search should an unplanned exit occur — not exactly a vote of confidence in internal bench strength.
Farient cautions that earmarked candidates need to be viable from an experience perspective but also mentally prepared – not with “an eye toward the door.”
Compensation: a big piece of the puzzle, but not everything:
Only 57% of directors cite the right pay package as critical to keeping senior talent, with 70% of those offering special grants and 34% paying at or above the 75th percentile.
Two-thirds say they would take a one-year low Say on Pay vote for a necessary retention award.
Company culture, career development, and realizable pay also top the list for engagement.
What boards can do now: To build a deep bench, boards can’t afford to be passive observers.
Use every tool: Regularly revisit succession plans and talent strategies. Ensure your compensation messaging for high potentials aligns with career discussions.
Forge relationships: Build rapport with potential successors. Their insights can reveal gaps or hidden gems that CEOs might miss.
Ask the right questions: Is our top talent energized? Are we stretching their skills? Are they emotionally invested in the company’s future?
Megan Wolf
Director, Practice, HR Policy Association and Center On Executive Compensation
MORE NEWS STORIES
Glass Lewis Flags Executive Perks
Your Comp Philosophy, Your Compass