The Director's Manual

Chapter 9The Other Succession ChallengeThe Board of Directors

What's in This Chapter?

• Why a Board Needs to Plan for Succession
• Demographics and Board Service Realities
• Enron, the 2008 Financial Collapse, and Dodd-Frank
• Building a Board Succession Plan
• Single-Issue Candidates
• Onboarding a New Director
• The Chemistry Factor
• Chapter Summary and What's Next

We outlined in Chapter 2, “Role of the Board,” the three critical questions that a board must address: (1) Does it have the right chief executive officer (CEO)? (2) Does it have a robust succession process and plan that includes agreement on a short-term successor? (3) Does it have the right strategy, and is that strategy being effectively implemented? This chapter adds an important fourth question: Does it have a succession plan for the board itself?

Why a Board Needs to Plan for Succession

In many ways, a corporate board follows a set of operational principles that mirrors the priorities of the company it serves. In clear terms, high-performing boards have a consistent focus on ensuring that individual members have the relevant skills and experience to meet the current challenges and risks faced by the company.

A February 28, 2015 issue of IQ Insights from State Street Global Advisors (SSGA), written by Rakhi Kumar, head of Corporate Governance, addresses this issue directly: “State Street Global Advisors believes that board refreshment and planning for director succession are key functions of the board.” The article goes ...