A recent policy change by the U.S. Securities and Exchange Commission underlines the strategic importance of a professional CEO succession planning process, write
Justus O'Brien, a consultant at Egon Zehnder International, New York, and shareholder relations expert Edward Ferris in
The Conference Board. The authors point out that, "regulators have reframed CEO succession as a risk management issue and placed its responsibility firmly in the boardroom." In practice, the SEC change calls for greater transparency. The authors urge boards to take steps like building a CEO talent pipeline and benchmarking internal against external talent. Improved disclosure is another key step towards reassuring shareholders that
CEO succession planning is independent and effective, the authors conclude.
