The Handbook of Board Governance, 2nd Edition

2CEO Succession Planning Trends and Forecast:

Gary Larkin

Research Associate, The Conference Board

Only 25 years ago, the succession of a public company's chief executive was just another traditional vanilla responsibility for the board of directors. In many cases, larger companies would have “emergency” CEO succession plans in place in the case of a long-term illness or sudden death. These used to be called the “executive gets hit by a bus” succession plan.

However, the rash of accounting scandals in the late 1990s and early 2000s followed by the financial crisis of 2008–2009 led to a new focus on CEO succession planning. Although many executives (save Enron's MCI WorldCom's leadership) were not prosecuted, the number of CEO turnovers skyrocketed from 1999 to 2009.¹

In the 1990s, roughly 5 percent of CEOs would be replaced annually, and the average tenure of a sitting CEO was nine years. From 2006 to 2009, the average CEO turnover rate rose to 15 percent a year and the average tenure dropped to 4.8 years.²

The Conference Board study, CEO Succession Practices: 2018 Edition, developed in collaboration with Heidrick & Struggles, annually documents and analyzes chief executive officer succession events of S&P 500 companies, updating a historical database first introduced in 2000. In 2017, there were 54 CEO succession cases among S&P 500 companies.

In 2009, at the peak of the Great Recession, the typical CEO of an S&P 500 held his or her position for 7.2 years—the shortest average ...