Boards Should Note New SEC Guidance, Advises Executive Recruitment Firm SEC Ruling on CEO Succession Transparency Heightens Planning Need
San Francisco, CA, November 24, 2009 -Due to new Securities and Exchange Commission guidance, corporate boards will need to become more proactive and transparent with their CEO succession planning, predicts David Nosal, CEO and founder of Nosal Partners, an international executive recruitment firm.
In late October, the SEC published a Legal Bulletin allowing for the first time shareholder proposals seeking information about CEO succession planning policies. This reverses prior SEC guidance excluding such shareholder proposals.
“Based on the new SEC guidance, many more corporations will be asked by shareholders to provide additional guidance regarding their CEO succession policies and plans,” Nosal says. “However, based on our experience and recent studies, many corporate boards lack formal CEO succession plans.”
Nosal recently co-authored the article, “Smart Planning for CEO Succession,” which appeared in the September/October 2009 issue of The Corporate Board. The article cites 2008 data from the National Association of Corporate Directors revealing that 42 percent of companies lack a CEO succession plan. Instead, Nosal advises boards to start succession planning now.
“Succession planning for your next CEO should begin the day you hire your current CEO,” Nosal says. “It should be a continuous, strategic process. Otherwise, boards are often forced into making an ‘impulse purchase’ on a CEO, which they may later regret.”
Given the potential complexity and sensitivity of hiring a new CEO, many companies are reluctant to share information about their succession processes. “Yet when CEO succession planning is done right, boards can enjoy the best of all worlds: transparency, continuity and accountability,” Nosal says. “Bottom-line, they’re more likely to make a high-quality CEO hire.”
About Nosal Partners
Nosal Partners LLC is the first and only Executive Leadership Solutions™ firm. Headquartered in San Francisco and with capabilities around the globe, the company delivers flexible, customized executive search, executive leadership consulting, and interim executive leadership solutions to a worldwide clientele. For more information, please visit www.nosalpartners.com.
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