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Board and management succession planning: key issues for boards to consider when addressing succession planning.

Article Excerpt
The CEO, senior corporate officers, and board members typically possess a valuable combination of intelligence, skills, and experience. Because they play important roles in a corporation, their loss can have a major impact on the corporation's short-term operations and long-term prospects for success.

Management succession planning

Boards of directors have a fiduciary duty to address business risks to which the corporation may be exposed, including the inevitable loss of senior corporate officers. Addressing losses on an ad hoc basis can prove unwise and costly. Without proper planning, boards often find it exceedingly difficult quickly and effectively to attend to tasks associated with replacing a senior officer, including:

* Assigning executive search functions to committees or external recruiting firms;

* Identifying qualified candidates to succeed the departing officer;

* Interviewing and negotiating with candidates;

* Communicating the officer's departure to the corporation's constituents; and

* Addressing administrative and legal matters, including securities filings.

Following are key issues for boards to consider, and ideas for overcoming obstacles boards may encounter during management succession.

Identify company insider successor candidates

Many boards find company insiders better suited than outsiders to succeed senior officers. First, the board can readily interact with company insiders to determine whether they possess the requisite intelligence, professional and interpersonal skills, and understanding of relevant markets and the corporation's business plan. Second, company insiders are familiar, and presumably compatible, with the corporation's...

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