Robert Stickler, a spokesman for BofA, said in a recent USA Today article, "There was a succession plan in place, but the board didn't have time to execute it, given the suddenness of this decision."
Of course, that's the point of a succession plan: to avoid the need for "sudden" execution. And it's not just Bank of America that could learn from D&B's planning process or JPMorgan Chase (JPM), which also went through a leadership debacle due to lack of planning.
The U.S. Conference Board published a survey in August that indicated over 50% of U.S. public companies surveyed in 2008 did not have a detailed plan for CEO succession. According to that same report, of the 1484 CEO departures in 2008, 46% of the successions were unplanned. Given that the median tenure for a corporate CEO is around five years, it is essential that succession planning become a priority for corporate boards.
This also brings up a previously discussed issue in this column about the conflicts of having the same person as CEO and chairman of the board. It is not hard to understand how the board may avoid discussion CEO succession when the chairman is the CEO. The strength of that model depends entirely on the strength of the individual holding the dual roles. This is not a formula for consistent and stable performance.In the case of D&B, whatever happens with their business results over the next few months, it will not be because of over concern about leadership. Sara Mathews has been president and chief operating officer since 2007 and has been on the board since 2008. Her time at D&B was preceded by 18 years with Procter & Gamble (PG), where she delivered a strong record of results in her various executive positions. We don't have to wonder about this because the board clearly has it under control. When succession plans are as transparent as those at D&B, we can focus more on the business and less on the rumors around who may be the captain of the ship. -- Written by Todd Thomas in Southfield, Mich.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV