Tuesday, April 18, 2006
The Role of the Board in CEO Succession
The NACD has a new publication out called The Role of the Board in CEO Succession. This is much needed as CEO succession is probably the most difficult issue any board of directors will face. One of, if not the most important, function of a CEO is to develop subordinates who can succeed him or her at the proper time. The board needs to oversee this process as part of the board's strategic direction to management of the company. One of the board committees -- usually compensation and nominating -- should review succession planning processes and, in particular, likely successors to key executives at least annually.
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The Board’s consideration of a new Chief Executives compensation for me seems to be a difficult task. For instance, do you think the Board at ExxonMobil, Corp. considered the current drastic rise in oil prices 10 years ago, which in turn has lead to high profits, and has made former CEO Lee Raymond’s retirement package viewed as bad, given the current gas price situation, within the media. The Board could not have predicted the enormous financial growth in recent times, when less than ten years ago a barrel of oil was close to $10 a barrel. Finally, I concluded with a quote. I do not believe that a successful and prospective executive doe not have any say in his or her compensation.
"I have never had a conversation in my whole career about my compensation”
Former ExxonMobil, Corp. CEO Lee Raymond
To see this quote visit the link http://money.cnn.com/2006/04/19/news/newsmakers/exxon_raymond.reut/index.htm
I enjoy this blog.
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