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What Drives CEO Succession Today—And Are Boards Ready? · C-Suite Perspectives

• 0:00
  Welcome to C-Suite Perspectives, a signature series by The Conference Board.
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  I'm Brian Campbell, the leader of the Governance & Sustainability
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  Center here at The Conference Board.
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  Today, we'll discuss CEO succession, including what boards are dealing
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  with now, why turnover has become more visible, and what practices matter most
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  when transitions happen under pressure.
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  Joining me are Blair Jones, managing director, and Greg Arnold,
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  managing director, of Semler Brossy.
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  Welcome Blair and Greg.
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  Thank you, Brian.
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  It's good to be here.
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  Let's start at a high level.
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  When you look at CEO succession right now, what feels different
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  from a few years ago and what, if anything, is driving that change?
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  It's interesting, Brian.
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  We found in the joint study with The Conference Board that the rate of
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  succession was actually increasing in 2025 and it wasn't limited
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  only to low-performing companies.
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  In our study we found that the rate of turnover among Fortune 500 CEOs was 12%
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  in 2025 compared to the bottom quartile of 14%, which is a shift from prior years
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  when there was a much bigger spread.
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  It's interesting too, the rate of forced exits, which can be a little hard to
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  quantify, also declined slightly for the first time in the last five years.
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  There is certainly a changing environment around CEO succession,
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  at least based on the study and work that we did this last year.
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  The way we're looking at it is that boards have been able to move away from
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  using corrective actions only to really thinking about succession strategically.
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  That's particularly important as they try to respond to the environment we're
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  in now that is constantly changing.
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  AI is turning things upside down.
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  We've got geopolitical risks, we've got other new technologies.
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  Being able to think about having the right leader for the right time
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  becomes increasingly important.
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  That's really what should have been happening all along.
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  It's just that as we hit COVID and then were quickly followed by a lot
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  of geopolitical tensions, it was easier for companies to hold onto the
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  talent they knew rather than continue the succession planning processes
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  that they had in place historically.
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  As you pointed out, we've seen a wave of CEO turnover recently.
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  Some of it's planned, some abrupt, and some under activist pressure.
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  How should boards be thinking about this landscape?
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  The lesson that underscores all of this is you always want to have a plan in place.
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  That plan has emergency components to it and your regular
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  succession planning components.
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  A board should be almost gaming out the scenarios to figure out who the
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  right successors are, depending on what happens, in what timeframes.
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  So that would be around an abrupt departure where a CEO
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  goes to another organization or where you have a forced exit.
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  It could include places where your technology changes quickly and you
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  need new skills from what you have.
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  It could happen because of a health incident.
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  It could happen because of activist pressure or could happen because
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  of normal retirement planning.
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  All of those are important to scenario play out.
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  The other thing too is the world is changing and evolving so quickly, with
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  AI disruption and geopolitical changes.
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  All sorts of things like that.
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  It's important for the company and the board to continue to evaluate the
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  CEO profile and the skills that are needed as they're looking forward.
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  And those skills may change.
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  What may have been important over the last five years may not be the critical
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  skills that you need for the next five.
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  Boards are doing that and running their talent evaluation process, understanding
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  if those skills sit in the organization or not, and whether you can build
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  them or you need to go look externally for talent to supplement the talent
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  you have in your organization today.
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  A big piece of that is the board having an open conversation with the CEO about that
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  CEO profile and how it may need to change with the person that's in the seat today.
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  It's important for the board to be transparent on that and think forward
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  about what may be important in the future.
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  As you alluded to, CEO tenure certainly feels less predictable
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  than it was, say, a decade ago.
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  What do you see as the driving forces behind these exits?
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  Is it strategy resets, investor pressure, or boards raising the bar?
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  I think it's all those things.
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  CEO succession can really be company specific.
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  It's hard to say that there's one trend driving all of this.
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  It depends on where the company is and its trajectory and lifecycle
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  and specific forces it's facing.
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  What we did see in the study with The Conference Board was that the average
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  tenure of departing CEOs increased a little bit this last year, which
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  signaled to us that many of these CEOs were seasoned, successful executives--
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  especially when you combine it with the higher departure rates among
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  the higher-performing companies.
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  Some of it is planned, I think, people who had been in the role for
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  a few years in the early 2020s-- there was so much disruption there--
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  getting to the end of their time.
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  And as boards are doing that, they can be more planful about the transition.
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  And then, of
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  course, there's a whole other bucket of unpredictable
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  change that's driving it as well.
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  So it really is a combination of things.
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  Boards, at the end of the day, as we said earlier, just need to get
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  back to resetting their succession planning approach so that they're
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  thinking about it strategically and they're ready for whichever of
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  these scenarios comes their way.
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  Because the one constant is change.
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  Having the right skills in place and having those skills developed
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  appropriately within the organization or looking outside, if that's
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  where the right skills reside, then that's what they need to be thinking
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  about and being prepared for.
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  We're also seeing a lot of high-profile shifts of CEOs at certain companies.
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  If you think about the Starbucks CEO hire or Intel, you have these
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  big legacy companies that are facing all sorts of new pressure now
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  that hadn't been in place before.
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  Some of that's driving CEO succession change as well.
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  On the predictability front, it sounds like internal succession remains the
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  preferred path, yet we're seeing that more boards are turning to external hires.
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  What's driving boards to look outside?
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  Is it missing capabilities, investor credibility, or urgency?
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  It's interesting.
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  As we looked through the findings from our study, external
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  appointments nearly doubled.
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  They were at almost 33% in 2025, which meant internal promotions dropped below
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  70% for the first time in eight years.
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  Internal promotions continue to make up the vast majority of succession
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  planning but these external appointments, as Greg was pointing out, are often
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  happening in the wake of investor dissatisfaction, huge shifts in
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  the landscape for these companies.
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  Sometimes those skill sets to make that kind of turn and respond to that
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  kind of pressure just don't reside internally, so companies are willing to
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  take the risk to move from the outside.
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  What you have to know when you go to the outside is that it is a risk.
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  You want to approach that thoughtfully and try to put in place all of the
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  processes and support to make those external hires as successful as possible.
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  I think that's right.
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  All things equal, companies would prefer to have a planned succession
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  process with internal candidates.
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  And maybe have one or two, three internal candidates that you have your
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  eye on for multiple years as you're thinking about where the business
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  is and what it needs in the future.
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  Sometimes boards are forced to go outside when the internal
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  culture or strategy needs a reset.
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  That can be a lot easier to do when you have a new voice coming in.
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  There's certainly cases where businesses have tried to do that internally and
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  it's worked but it sends a stronger signal externally when you bring in a new
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  person from the outside to be the CEO.
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  There can be things that are strategically related.
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  We have one client who needed to get into an entirely new market and the
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  people who had grown up internally had never worked in that market
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  and didn't have the relationships or the expertise to play there.
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  In that case, the external hire became very important.
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  With that said, they surrounded that external hire with very capable,
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  high-potential business unit heads to help with the cultural piece of what
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  Greg was talking about and make sure that the transition was as good as possible.
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  We've had other clients too, where the business had been focused on things
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  like higher profit margin, higher return on capital, but the business
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  was not getting the multiple in the market that they could have if they
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  had a higher emphasis on growth.
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  And so in that situation, they brought in an external CEO who changed the
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  shape of the organization, changed the reporting structure, reoriented
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  the business back toward growth from a comp perspective, which is the things
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  we deal with, change the incentive plan to reweight certain metrics, etc.
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  That degree of change can be easier when you have an external CEO rather
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  than somebody that has a lot of the legacy relationships because
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  the new person can start fresh.
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  I appreciate that, Greg and Blair.
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  That leads to the question of what do you actually say about the plan?
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  We'd note that there's tension between keeping succession plans
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  confidential while making them credible.
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  How should boards strike that balance and what can they responsibly
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  signal to investors and employees?
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  In our experience, one way this comes up often is in the shareholder outreach
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  conversations that boards and comp committees are having during the off
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  season in the summer and the fall, where they're talking to the governance
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  groups at large institutional investors.
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  CEO succession and process is often a question that comes up and having
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  a good response to that and making sure your directors are prepared to
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  address those questions in a credible way is a good first step that I
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  think applies to all companies, whether it's internal or external.
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  Creating that credibility is important.
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  There's other things.
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  If there's a planned internal succession for a business that's in
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  a steady state, often what you'll see is a leading candidate move
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  into a new role, like a COO role.
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  And that's a pretty strong signal externally that's the CEO and waiting,
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  or at least the CEO in trial period.
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  That's a strong signal that works in certain cases.
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  Or you may do things like have the internal candidate begin to take on
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  broader roles in investor relations, on earnings calls, or at conferences, etc.
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  That can send the signal for in those situations with an internal candidate.
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  Internally, there are a lot of ways to send signals to people about
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  their importance to the organization and to help with their retention.
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  One of the primary ways to do that is to identify them as high potential.
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  Let them know they're high potential, put them through an assessment process
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  with an external partner which will help identify their strengths relative
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  to tried and tested profiles of successful C-Suite executives from both
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  within and outside the organization.
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  Also identify their development needs.
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  That way they get coaching and they get specific areas to work on.
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  You can also expand their roles.
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  All of this signals to them that they're in the hunt for a larger role.
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  Maybe it's not the CEO role but they're someone who's
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  important to the organization.
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  That has strong messaging potential to those individuals and hopefully keeps them
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  engaged with the organization through the time that they may be relevant candidates.
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  From an external standpoint, Greg underscored the importance of talking
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  to your investors about your process and the rigor that you have around
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  looking at the criteria for successors on an ongoing basis, as well as the
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  conversations that the board is having to make sure that both emergency and
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  planned succession plans are in place.
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  There also are some unintended things companies can do as
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  they're preparing for succession.
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  For instance, if you find yourself in a situation where you aren't quite ready to
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  have a succession and it would be helpful to the organization to keep a CEO in place
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  for a period of time while you allow the candidates that are internal to get a
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  little stronger or to assess the need to go externally, some companies will put in
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  place a retention for their existing CEO.
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  There are pros to that in the sense of you create some near-term
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  stability, particularly if that CEO has a lot of credibility in
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  the marketplace and has delivered good performance for shareholders.
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  Shareholders can get some confidence that, at least for a period of
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  time, that individual be in place.
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  The con is that some of the internal candidates now have a timeframe
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  associated with when the succession may take place and they may decide
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  that's too long for them and may seek opportunities externally.
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  In addition, investors may also question why the board wasn't more ready and needs
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  to keep the CEO on for a period of time.
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  They may look at it as something broken in the succession process.
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  As you start to think about the different things you're doing and
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  the signals you're sending, you just want to think about both the intended
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  and the unintended consequences.
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  On the comment about the multiyear retention awards, the importance of
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  having a rationale for it is just critical for investors to understand.
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  If they think it's because the CEO needed to be retained and the board was being
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  reactive, that's where it can fall flat.
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  If it's proactive; intentional; has a clear rationale; and even tied to
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  go-forward strategy, effectiveness, and success of the business, then it
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  can land a little better externally.
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  Do you agree?
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  Yeah, I fully agree with that.
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  The signaling thing can be tricky too, especially if you have
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  multiple candidates in the running.
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  We've seen some high-profile companies where there's been departures and
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  speculation in the media that the person left because so and so was
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  more likely to become the CEO.
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  When you're sending those signals in terms of role shifts or other things
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  like that-- or even not intending to send a signal, just expanding the role
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  and training the person and giving them the broader experience they need-- if
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  it doesn't work or you have multiple people that are in the horse race, you
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  just have to be prepared too that those people may leave and understand that
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  you have good succession behind them.
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  And have a good response if you get questions around those things too,
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  because it's not always that a well- laid plan works out perfectly or the
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  person that you elevate as the CEO in waiting turns out to be the right
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  candidate at the end of the day.
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  Boards just have to be ready to absorb some of that too, if there needs to
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  be a change in direction, whether it's the business context changes,
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  or an activist comes in, or it's just the person didn't turn out to be
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  the right person at the right time.
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  There's downsides as well as upsides with some of these
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  shifts we've been talking about.
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  We're going to take a short break and we'll be right back with
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  more of my conversation with Blair Jones and Greg Arnold.
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  Welcome back to C-Suite Perspectives.
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  I'm your host, Brian Campbell, the leader of the Governance & Sustainability
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  Center at The Conference Board, and I'm joined by Blair Jones
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  and Greg Arnold of Semler Brossy.
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  I'm going to come right back into the questions here.
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  What would be the appropriate role for a sitting CEO as far as shaping
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  or influencing their successor?
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  The first thing you want to do is have open conversations, like
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  Greg said, with the CEO as you're approaching their retirement.
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  This process at some level starts from the day they become CEO but certainly
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  becomes more urgent as you get, perhaps, two to three years out from
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  what is a likely succession timeframe.
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  So the first step is just involving the CEO to understand his or her thinking
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  about the tenure, about the likely candidates, and to share where the
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  board's head is around how they would like the succession planning process to go.
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  But the CEO's involvement from there really depends on the context.
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  If it's a company where things are running well and the strategy is not likely
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  to change then the CEO's involvement is likely higher in that regard.
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  Some of the individuals that have been brought up internally within the
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  organization are likely candidates and the CEO can be very helpful in bringing
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  those along and getting those individuals to the right place in the process.
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  If it's more of a performance issue then it's a little bit harder
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  for the CEO to be as involved.
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  The board should keep the CEO informed that a process is going on but they may
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  be less involved in some of the board discussions than they would be otherwise.
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  Often, you have a period of time that you're able to do this, working together,
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  where you're doing these assessments of the individuals that we had talked about.
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  The CEO is weighing in with their assessment of the individuals as well
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  and being helpful to the board as they try to plan for the next stage.
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  Ultimately, this is a board process.
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  The CEO should be involved to the extent they can be helpful
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  to the board but the board has to own the selection of the new CEO.
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  It's the most important decision from a governance perspective.
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  The other thing I would say, we've seen is that particularly among large
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  companies that have been performing well, it's become pretty common to
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  have a long-tenured CEO move into an executive chair role for a period of
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  time to help signal stability externally.
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  And it helps the new CEO navigate, have a sounding board,
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  and provides a transitional period for the outgoing person.
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  In many cases, that seems to work pretty well.
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  We've seen it at a number of our clients over the last several
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  years work pretty effectively.
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  The key to it, though, is making sure that there's a defined
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  period of time and defined roles.
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  In all cases, you don't want the old boss hanging around and
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  poking their finger in things with the new bosses running the show.
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  You really want to have clarity over who's making the decision, who's in the
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  seat, who has the ultimate responsibility for guiding the organization, etc.
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  But it has been pretty common to start to do these transition periods over
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  six to 12 months, where you have an exec chair role and that person tapers
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  their involvement off over time.
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  It is part of a planned succession process.
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  And that allows the new CEO to get their sea legs around all of
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  the new responsibilities, while the outgoing CEO handles some
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  of the board responsibilities.
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  But you do want both clear decision rights and a natural process of transitioning
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  out of that role so that the new CEO can fully grow into the role independently.
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  One of the things that we see in our work with boards and comp committees is the
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  way the new CEO interacts with the board, talks to the board, presents to the board,
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  receives feedback from the board, is a new process often for that individual.
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  Having somebody who is in the room, who is involved, who's done it for
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  many years, can help that piece because the person will probably be pretty
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  good at strategy, at managing direct reports, at talking to investors.
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  But that board-CEO dynamic is a piece that can only be experienced
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  for somebody who's a CEO.
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  And so having that exec chair role can be helpful in that context too.
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  The other thing too is in challenge situations, sometimes
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  the CEO's not involved at all.
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  That's right.
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  Those are tricky.
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  Those are tricky where the board's running the process on their own.
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  The CEO may know something could happen but doesn't know when or if it will.
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  And those are tricky.
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  And in that case, obviously the CEO is not really involved at all in
• 20:22
  shaping the process or identifying the successor or any of those things.
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  Hopefully companies aren't in those situations very often.
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  I think that's right.
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  Those unexpected CEO exits, they seem less rare than they used to.
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  So how can boards prepare for a sudden transition?
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  And what do the best-prepared boards do differently?
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  Sudden transition can take a lot of different forms.
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  Sometimes there's a sudden transition because your CEO departs for a different
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  opportunity, a better opportunity, a bigger company, a different
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  industry, etc. Those will feel abrupt.
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  In really unfortunate circumstances, there could be a health issue or some other
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  issue where the CEO needs to step down.
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  That's one category I would say, and often in that category, boards will
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  have contingency plans in place around interim emergency successor roles.
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  The process is to identify who steps into that role.
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  Sometimes it can be the CFO steps in, sometimes it could be a director who
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  is a former CEO steps in and leads as an interim for a period of time.
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  We actually saw that interim appointments in this last year, in the study that
• 21:36
  we did with The Conference Board, came down from 24 but it was actually still
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  above the historical average that we saw for a few years before that.
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  It's probably a pretty variable number depending on circumstances at
• 21:48
  the time but just making sure that you have that emergency succession
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  plan in place is a good practice that most companies will have.
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  In the other case of emergency unexpected exit where there's poor performance,
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  we've talked a lot about that.
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  That's a different context, I would say, where you're finding a new
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  person and letting the incumbent go.
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  These emergency succession plans need to include emergency succession-- not
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  just for the CEO, but for some of the other roles as well-- because it's
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  not uncommon, for instance, for the CFO to step into that interim role.
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  So you need an emergency succession plan for the CFO as well, so that you
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  have an interim who can fill in there.
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  But these emergency succession plans are not just about
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  identifying who the individual is.
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  They have to do with how the process for getting all of this in place
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  works, what the communications are both internally and externally.
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  In every circumstance we've been in, regardless of which of the circumstances
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  that Greg outlined drive the emergency transition, the board has had to
• 22:53
  lean in more than it would otherwise.
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  Because it's really-- at least at the time of the transition-- a community
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  leadership effort to make sure that you're clear about how the interim process is
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  going to be led and what needs to get accomplished immediately versus what can
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  take a little bit more time to get to.
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  A lot of that depends on which of those circumstances it is as to what
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  the mandates are for that period.
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  And if it's an interim, how do you support that person that's in the role where
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  they may not have fully developed sides?
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  If a CFO is stepping into the role, how do you support with
• 23:32
  operational expertise and decisions?
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  You probably have division leaders or business unit heads that can run
• 23:38
  their business but how do you make sure that you're having the right
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  conversations for somebody who may not have been fully ready to step into
• 23:45
  the full CEO role in a period of time?
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  It's important to make sure that the team around the person is adequately
• 23:52
  equipped and understands how the process will work and how the decisions flow too.
• 23:57
  And boards are increasingly held accountable when successions go wrong.
• 24:01
  What responsibility sits with the board versus management and at what point does
• 24:06
  a failed transition become a governance issue rather than a leadership one?
• 24:10
  It's a really interesting question, Brian.
• 24:13
  The board, as we said earlier, choosing the CEO is one of their
• 24:18
  most important decision rights.
• 24:19
  If there's a failed CEO, it sits squarely with the board.
• 24:23
  Some of the other successions are certainly overseen by the board and
• 24:28
  included in the process of looking at some of the key C-Suite executives but
• 24:33
  that responsibility is probably more shared among management and the board.
• 24:38
  Nobody wants to end up in this circumstance.
• 24:40
  Everybody has to be sad and has to own a bit of something that's failed.
• 24:45
  In terms of your question of when does it become a leadership
• 24:48
  issue versus a governance issue, sometimes you do make wrong choices.
• 24:53
  As with many failures, the question is how do you respond to that and
• 24:56
  how quickly do you respond to that?
• 24:58
  The investor community is going to look at how quickly you course correct
• 25:02
  and how you message around that course correction, as well as what criteria
• 25:10
  and support you put in place the second time around to make sure that
• 25:14
  you don't have continued failures.
• 25:16
  Companies can probably endure one failed succession but if you have another
• 25:22
  one, that's when it starts to get problematic from an investor perspective
• 25:28
  and they start to question governance.
• 25:30
  The other thing is if boards are taking a risk on a new candidate and it doesn't
• 25:34
  work out, obviously that's a different set of circumstances than if you had
• 25:39
  an internal, long-trained successor that just wasn't up to the task.
• 25:43
  This is a little context specific, in terms of how it's evaluated and
• 25:47
  what the specific circumstances are around the candidates.
• 25:52
  We've been talking implicitly about large companies.
• 25:55
  There's an interesting dynamic on this, smaller companies where they
• 26:00
  can't afford to have a really deep bench and so the CEO does a lot.
• 26:07
  They may not have clear internal successors and some of my
• 26:11
  smaller clients, it's actually an intentional decision they've made.
• 26:15
  They'll have an emergency plan where they may have a former CEO that sits
• 26:19
  on the board that could step in if there's an emergency but they know for
• 26:24
  real planned succession that they're likely going to have to go external.
• 26:29
  In that context, it's just tricky.
• 26:32
  It's tricky because you have higher risk with an external candidate.
• 26:36
  You don't know if you're going to close them.
• 26:38
  You don't know if they're going to fit culturally, etc. If you're one of
• 26:42
  those companies, you get a little bit more leeway if it doesn't work because
• 26:48
  the other side of the coin is you're adding cost, you're adding management
• 26:51
  team, you're adding all these layers to the organization for years that
• 26:54
  are going to impact the business.
• 26:56
  And maybe investors don't want that.
• 26:58
  And so they'll acknowledge and give you a little bit wider range
• 27:02
  to have one that doesn't work.
• 27:03
  Rather, if you're a Fortune 50 company, I think you get a little
• 27:07
  bit less leeway around succession and successful succession planning.
• 27:13
  The main lesson here is that you should do everything in your power to try to
• 27:18
  get the most successful transition in place, where you've had exposure to the
• 27:22
  candidates, you've done the assessment.
• 27:25
  You're going in with eyes wide open about the real strengths that this candidate
• 27:29
  brings, as well as the weaknesses.
• 27:31
  But if it doesn't work out, the board needs to act quickly and have a clear plan
• 27:37
  for how they're going to move forward and create a better outcome on the other side.
• 27:43
  I'll just add one more thought.
• 27:44
  As we've seen over the last few years, the comp committee's mandate has expanded
• 27:48
  beyond the traditional exec comp items to cover things like human capital
• 27:52
  management, talent, succession, etc. This is an area where the comp committee tends
• 27:58
  to have more time to go a little bit deeper into the talent of the organization
• 28:03
  and really understand sort of plans, processes, individual people, and how
• 28:08
  that is setting the company up around succession generally because that's what
• 28:13
  feeds the pipeline into CEO successors.
• 28:17
  That may sit at the board at some companies but often, just given
• 28:20
  all the responsibilities of the various committees and board level,
• 28:23
  that sits with the comp committee.
• 28:24
  This has actually been a good corporate governance trend over the last few years
• 28:28
  because it's helping companies build the muscle and showing to the management
• 28:33
  team that it's a board-level priority.
• 28:35
  And so it gets a little bit more focused too, in that respect.
• 28:39
  And allows you to bring in candidates earlier where you do
• 28:42
  feel like you've got some holes.
• 28:45
  Final question.
• 28:46
  If a board makes just one improvement to its CEO succession approach
• 28:50
  this year, what should it be?
• 28:54
  Really depends where the board is so far on their process.
• 28:57
  I'd say for all boards, it's important to have a process, be intentional around it.
• 29:05
  Make sure that you keep your CEO profile updated as the business
• 29:10
  context changes and evolves.
• 29:12
  Often these are established and you have a CEO in place and then
• 29:16
  they're not always revisited.
• 29:17
  But revisiting that annually, making sure that it still fits and that the
• 29:21
  board is really looking for what the organization needs two, three, four, five
• 29:26
  years down the road is an important piece.
• 29:29
  You can make sure that both you have the right candidates identified
• 29:33
  but also the good pipeline and processes to make sure that you're
• 29:36
  growing those people internally.
• 29:38
  I'd say that's one thing that boards should just check on,
• 29:41
  make sure they're comfortable with relative to their approach.
• 29:45
  No question.
• 29:46
  And maybe that includes getting someone in externally to help them, which
• 29:51
  would not just be about succession.
• 29:52
  It's about strategy as well, pushing them as to the future focus for the
• 29:56
  organization and where things may change.
• 29:58
  Because that may mean when you do this profile, the profile may have skills
• 30:03
  that aren't resident in your organization or may mean you need to dig a little
• 30:06
  bit more deeply beyond your first level successors to your second level successors
• 30:11
  to end up with a more viable candidate.
• 30:14
  I'll add just one more thing.
• 30:15
  Because what we do is exec comp, also just check that if you have internal candidates
• 30:21
  that the comp is appropriate, that there's appropriate holding power, that we're
• 30:25
  sending the right signals through pay, that you're not going to lose the person
• 30:29
  unexpectedly as stock price volatility flows through equity, holding power,
• 30:33
  values, etc. That's a good due diligence check as well for comp committees to do.
• 30:39
  Okay.
• 30:40
  Thanks for this wonderful conversation on CEO succession.
• 30:43
  Thank you so much, Blair and Greg, for joining us today.
• 30:46
  Thank you.
• 30:47
  Thanks, Brian.
• 30:49
  And thanks to all of you for listening to C-Suite Perspectives.
• 30:52
  I'm Brian Campbell, and this series has been brought to
• 30:55
  you by The Conference Board.