ALP: What would happen if your Chief Executive Officer was suddenly unable to perform his or her duties?
In today's environment, when the functions and duties of boards of directors are constantly being examined, directors must address and accomplish one of their most important functions - management succession planning. Without it, directors may be putting their company and its shareholders in jeopardy and possibly even violating their fiduciary duties. It is critical for the continued well-being of a company that succession planning be in place.
As stated in the New York Stock Exchange Listed Company Manual "succession planning should include policies and principles of CEO selection and performance reviews, as well as policies regarding succession in the event of an emergency or the retirement of the CEO."
There is no one-size-fits-all when considering an orderly succession plan. Each board must arrive at a plan that fits its company's objectives and attributes. However, what is critical is that the directors assure themselves that a plan is in place, that the plan be in writing to ensure everyone knows about it and that succession matters be considered annually, even when the company is widely successful and the CEO is in great health.
Avoid crisis emergency management. Address succession planning now! Management succession planning is good for the corporate enterprise, the CEO, the rest of the management team, the employees and the company's shareholders. Management succession planning assures the continuing value of the company.