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
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