Board Governance & CEO Succession Flashcards

What is the role of 'talent reviews' at the board level in supporting CEO succession?

Answer: To give the board direct visibility into the depth and readiness of the leadership pipeline

Board-level talent reviews provide directors with firsthand exposure to succession candidates and a clear picture of pipeline depth, reducing over-reliance on CEO-filtered information.

In CEO succession, what is a 'horse race' approach and what is its primary disadvantage?

Answer: Pitting multiple internal candidates against each other openly; it risks losing losing candidates

The horse race approach openly pits internal candidates against each other, which can cause strong executives who do not win to leave the company, depleting the leadership pipeline.

What is the recommended frequency for the board to formally review the CEO succession plan?

Answer: At least annually, with interim updates as conditions change

Governance best practice requires at least an annual formal review of the CEO succession plan, with the flexibility to update it when material business changes or candidate readiness shifts occur.

What is the significance of 'scenario planning' in the context of board-level CEO succession?

Answer: It helps the board prepare different succession responses for varied departure circumstances

Scenario planning prepares the board for multiple departure types — planned retirement, sudden incapacity, forced removal, or strategic pivot — each requiring a different succession response.

Which governance principle dictates that the board — not management — must own the CEO succession process?

Answer: Board primacy in governance

Board primacy holds that the board is the highest governing authority and bears ultimate accountability for CEO selection, making it a non-delegable responsibility of the board.

When an external CEO search is conducted, what is the primary advantage of using an external search firm alongside the board's own process?

Answer: They provide access to a broader market map and candidate pool beyond the board's network

Executive search firms provide a comprehensive market map, access to passive candidates, and benchmarking data that extend beyond the board's existing professional network.

What is an 'acting CEO' or 'interim CEO' arrangement and when is it most appropriate?

Answer: A temporary leadership appointment to stabilize the company while a full search is conducted

An interim CEO provides temporary leadership stability — often from an experienced executive or board member — allowing the board adequate time to conduct a thorough permanent CEO search.