The Handbook of Board Governance, 2nd Edition

APPENDIX 1Model CEO Succession Planning Charter

Richard Leblanc, CMC, BSc, MBA, LLB, JD, LLM, PhD

Professor of Governance, Law & Ethics, and Director, Master of Financial

Accountability Program, York University; and Independent Governance Advisor

Introduction

CEO succession is the most important job of the board, as the earlier chapters have emphasized. Nevertheless, the empirical data on CEO succession is not stellar. Many boards fail at this important area of responsibility, or make mistakes on the basis of emotion, undue influence, a dominant incumbent CEO, or other reasons.

There should be a board committee that has CEO succession as part of its terms of reference, and succession planning should occur earlier in the incumbent CEO's mandate so it does not appear as a lack of confidence when it occurs later. This committee can be the Human Resources Committee, the Nominating and Governance Committee, or an Ad Hoc CEO Succession Planning Committee.

This committee reviews and recommends and the board of directors reviews and approves. A written Emergency CEO Succession Plan and a Permanent CEO Succession Plan should be reviewed, discussed—including in the absence of the incumbent CEO—revised as necessary, and approved in writing by the board each year.

The emergency plan should contain a named individual who will be the interim CEO in the event of an unanticipated exit by the incumbent CEO while a permanent CEO is determined by the board. An emergency could arise on the basis ...