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.
