September 7, 2022
CEO Succession: Compensation Questions to Ask at Each Stage
Compensation is a key part of CEO succession planning, which – as one of the board’s most important responsibilities – should receive ongoing attention even when no immediate turnover is expected. This 14-page Semler Brossy memo describes questions to ask at each stage of the process:
1. No imminent change – Does compensation for rising stars & potential successors reflect their high value to the company and inspire them to stay?
2. Succession expected in the next two years – Do we need to take any bolder actions for the highest-potential candidates?
3. Just before the succession event – How should the new CEO’s pay be established relative to market and their predecessor?
4. Post-succession – How do we need to change pay to reflect changes in the business priorities & strategy?
The memo also points out that a transition event can be a time to add ESG incentives to executive pay packages or change pay structures for the C-suite as a whole – but all decisions need to be made with an eye to both internal & external scrutiny.
– Liz Dunshee