Knowledge Center: Publication
Overcoming the Challenge of ‘Mismanaged Agreement’ Among DirectorsSubscribe to Board Effectiveness 10/15/2014 John T. Thompson
Imagine that the board of a successful company, facing no apparent crisis, approaches the date of a long-planned CEO succession and finds, to its surprise, that no internal candidate is fully ready to assume the top job. A board member steps in as interim CEO while an external search is conducted for a successor or the most promising internal candidate gets up to speed.
Not surprisingly, investors don’t like this scenario and punish the stock accordingly. What is surprising is that not a single director desired this outcome, and yet here they are.
How is it possible that well-intentioned and certainly intelligent directors could somehow collectively fail at CEO succession planning when each one of them would attest in private to its importance?