Boards are being forced to think about finding future leaders earlier as shareholders demand greater insigh
One often-cited study* shows 40 per cent of CEO transitions end in failure within 18 months. Tenure in the post is also declining**.
Boards must then deal appropriately with the losers — either find incentives to prevent them from leaving or ensure they exit without animosity. Last year, Morgan Stanley chose to award the same bonus to three candidates even though only one took the top job. The bank also gave senior roles to the two that lost out, creating a more distributed leadership model.
* https://www.researchgate.net/publication/8008180_Ending_the_CEO_Succession_Crisis
** https://corpgov.law.harvard.edu/2023/08/04/ceo-tenure-rates-2/
Source: https://www.ft.com/content/3ec199e7-fc04-45c4-987b-2b2ac9e0ed6e
Boards must then deal appropriately with the losers — either find incentives to prevent them from leaving or ensure they exit without animosity. Last year, Morgan Stanley chose to award the same bonus to three candidates even though only one took the top job. The bank also gave senior roles to the two that lost out, creating a more distributed leadership model.
* https://www.researchgate.net/publication/8008180_Ending_the_CEO_Succession_Crisis
** https://corpgov.law.harvard.edu/2023/08/04/ceo-tenure-rates-2/
Source: https://www.ft.com/content/3ec199e7-fc04-45c4-987b-2b2ac9e0ed6e