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Korn/Ferry International Releases Report On Trends In Board Governance

Stocks in this article: KFY

LOS ANGELES, Oct. 11, 2012 /PRNewswire/ -- Korn/Ferry International (NYSE: KFY), a premier global provider of talent management solutions, today announced the release of the 2012 Korn/Ferry Market Cap 100, the 37th in the firm's annual reports on trends in board governance.

The report was released at the FT-ODX directors-only conference, which concludes today.

The new edition, subtitled "Smooth CEO successions: Lessons in passing the baton," examined contrasting case studies—including transitions where the successor CEO came from inside, outside, and off the board of directors itself—to find the common denominators of success.

To create the report, three vice chairmen at Korn/Ferry International with expertise in CEO succession—Dennis Carey, Stephen Mader, and Jane Stevenson—interviewed current and former top executives and directors at AmerisourceBergen Corporation, Marriott International Inc., MasterCard Worldwide, and Newell Rubbermaid Inc.

Alongside accepted best practices for succession planning, the report suggests boards should weigh ten other factors when changing CEOs, including:

Agree on the strategy first. The board must reach consensus on the future business environment and the strategy to address it. Then, and only then, is it ready to define the attributes that the new CEO must have to pursue that strategy. 

Pick your succession leader with care .Whether it's the lead director, board chairman, or a committee chair, this person needs to be: highly disciplined, able to devote significant extra time to the task, intuitive about people, and trustworthy in the eyes of the board. CEO experience is also highly recommended so that the search leader knows firsthand what the role will demand of a candidate.

Define the full board's role. The search for a new CEO can be delegated to a committee. Pick that approach if it plays to your board's strengths and dynamics, recognizing that there are tradeoffs. Involving every director may require more time to make decisions and pose confidentiality issues. A narrow approach may limit the process' focus and make final consensus harder. 

Define the sitting CEO's role.The CEOs in some circumstances lead and manage the succession process. In others, the CEO is cast as an important advisor. The key is to make a conscious decision and reach a clear agreement with the CEO on his or her participation.

In addition, the report details how MasterCard successfully brought in its next CEO as president and COO ten months before handing him the reins, and how Newell Rubbermaid handled a tricky situation: sizing up a sitting director to be CEO. 

The KFMC100 also includes an analysis of proxy and governance statements.  Among the notable findings from this year's report:

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