An Antidote to Excess


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.

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