A recent study by Institutional Shareholder Services found CEO succession planning, which many public company boards have adopted over the past three years, to be a key practice in reducing excessive executive and golden parachute payments. The study suggests that without a succession plan in place, a board can become desperate to hire an outsider and is then more willing to offer a “candy store of incentives.”
|
Index Group
|
Percentage of companies with a board-approved CEO succession plan, Jan. 2004 |
Percentage of companies with a board-approved CEO succession plan, Jan. 2007 |
Percentage- point change
(rounded) |
| CGQ Universe 1 |
2% |
28% |
+26 |
| Russell 3000 |
12% |
64% |
+52 |
| S&P 400 |
38% |
90% |
+52 |
| S&P 500 |
65% |
96%
|
+32 |
| S&P 600 |
20% |
82%
|
+62 |
Grand Total
|
14% |
54% |
+39 |
1. 5,000 public companies tracked by ISS’ Corporate Governance Quotient
Source: Exit Pay: Best Practices in Practice, The ISS Center for Corporate Governance, 2007, www.issproxy.com/pdf/ExitPay2007.pdf.