1] Multimillionaire Matchmaker: An Inside Look at CEO Succession Planning

David F. Larcker
Stanford University - Graduate School of Business

Brian Tayan
Stanford University - Graduate School of Business

April 15, 2010

Rock Center for Corporate Governance at Stanford University Teaching Case No. CG-21

Abstract:     
This case takes an inside look at CEO succession planning at Energy Corp. The case provides an
overview of various models of succession planning, including external search, COO
appointment, a horse race, and the inside-outside model. The case then outlines the process by
which Energy Corp chooses to identify a successor. Readers of the case are expected to evaluate
Energy Corp’s effectiveness, and discuss the various risks of succession planning and how they
can be mitigated. Learning objective: To evaluate CEO succession planning and identify
transition risks from the standpoint of the board of directors.

Keywords: Corporate Governance, Board of Directors, Labor Markets, CEO, Succession

Planning

2] Organizational Complexity and Succession Planning

Lalitha Naveen
Temple University

Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

Abstract:     
This study uses a large sample of firms to examine how human capital considerations affect the process
of CEO succession. Costs and benefits of succession planning are affected by a firm's level of operational
complexity and human capital requirements; firms that are more complex incur greater costs to
transferring firm-specific knowledge and expertise to an outsider, and should be more likely to groom an
internal candidate for the CEO position. Consistent with this, I find that a firm's propensity to groom an
internal candidate for the CEO position is related to firm size, degree of diversification, and industry
structure. My results also suggest that succession planning is associated with a higher probability of
inside succession and voluntary succession and a lower probability of forced succession. I also provide
evidence that horizon problems are mitigated to some extent by having a succession plan.

Keywords: management turnover, succession planning, corporate governance, human capital

3] Private Trusts and Succession Planning for the Severely Disabled or Cognitively Impaired in
Australia

Terry Carney
University of Sydney - Faculty of Law

Patrick Keyzer
Bond University

Bond Law Review, Vol. 19, No. 2, pp. 1-25, 2007

Sydney Law School Research Paper No. 08/108

Abstract:     
This paper examines the social security implications (and barriers to effective forward planning) posed by
the means tests, gifting and private trusts/companies provisions governing payments made to people with
cognitive or other severe disabilities, and their parental or other carers. It critically reviews Australia's
'special disability trust' reforms designed to ease these pressures, and concludes that these measures will
do little to achieve their purpose. Overseas models and law reform options are examined.

Keywords: social security, disability trusts, cognitive impairment, succession planning, law reform

4] The Role of the Board in Turbulent Times: CEO Succession Planning

Matteo Tonello
The Conference Board, Inc.

John C. Wilcox
Teachers Insurance and Annuity Association College Retirement Equities Fund (TIAA-CREF)

June Eichbaum
OakTree LLC

The Conference Board Executive Action Series, No. 312, August 2009

Abstract:     
The paper reveals flaws in how many corporate boards execute their fiduciary responsibilities on CEO
succession planning and leadership development. The authors propose a roadmap of five critical steps
for boards to remedy the current situation. Among its recommendations, the paper urges directors to
make CEO succession planning integral to long-term business strategy and ensure that the compensation
committee is fully involved.

Keywords: CEO succession, corporate governance, turnover, compensation committee

5] Analyzing Credit and Governance Implications of Management Succession Planning

Christian Plath
Moody's Investors Service

May 15, 2008

Abstract:     
Oversight of CEO and senior management succession planning has always been a critical board
responsibility, but recent high-profile CEO departures have brought the issue to the fore. Changes at a
number of high profile issuers recently have highlighted the risks companies may face due to sudden,
unforeseen CEO and senior management departures or dismissals. Moody's expects unprecedented
investor and media attention on succession issues in 2008, due to factors that include: fallout from the
turmoil in the financial markets; a more challenging operating environment; and continued pressure from
activist investors.

Within this context, Moody's views effective succession planning - in particular CEO succession planning
- as critical to the sound management and oversight of an organization. While we analyze succession
issues on a case-by-case basis, and while the degree of headline risk may vary, we have found there are
a number of processes and best practices that help to instill investor confidence and reduce risk, based
on our governance reviews of over 700 North American companies.

This special comment describes how Moody's views best practices for the role of boards in overseeing
succession planning and management development. This comment is part of a series of Moody's reports
that describe the benchmarks against which Moody's evaluates the quality of corporate governance within
rated issuers as part of determining the effect of governance on those firms' debt ratings.

Working Paper Series

6] The Value of an Heir Apparent in Succession Planning

Bruce K. Behn
University of Tennessee, Knoxville - College of Business Administration

Richard A. Riley Jr.

West Virginia University - Division of Accounting

Ya-wen Yang
Wake Forest University

Corporate Governance: An International Review, Vol. 13, No. 2, pp. 168-177, March 2005

Abstract:     
This study examines whether the equity markets value firms that have a succession plan in place. We find
that firms with an heir apparent already designated upon the death of the CEO have significantly higher
cumulative abnormal returns on the date of death than firms that have not identified an heir apparent. This
study contributes to the existing governance/succession planning literature by providing empirical
evidence that succession planning appears to be valuable to companies engaged in succession
transitions.

Accepted Paper Series

7] Management Turnover And Succession Planning In Firms

Lalitha Naveen
Temple University

June 5, 2000

Abstract:     
In this study, I investigate some of the issues involved in the process of CEO succession. Parrino (1997)
suggests that one way for organizations to reduce their succession costs is to have formal succession
plans. I provide evidence consistent with firms managing succession so as to reduce succession costs. I
show that the probability of top executive turnover is higher for firms that have succession plans. Also
such firms are more likely to have inside succession. I also find that firms that ex-ante expect to have high
costs of outside succession are more likely to do succession planning. Specifically, I find that succession
planning is more likely in firms in heterogeneous industries, in larger firms, and in diversified firms.
8] Examining the Impact of SEC Guidance Changes on CEO Succession Planning

Justus O'Brien
affiliation not provided to SSRN

Edward Ferris
Milano School of Management and Urban Policy

Director Notes, No. DN-007, April 2010

Abstract:     
In an October 2009 release, the United States Securities and Exchange Commission effectively removed
the ordinary business exclusion defense used by companies reluctant to disclose their CEO succession
process to shareholders. The policy change allows for a new wave of corporate governance scrutiny, as
regulators and shareholders increasingly focus on CEO succession practices. Companies and boards
would do well to prepare.

The change indicates that regulators have reframed CEO succession as a risk management issue and
placed its responsibility firmly in the boardroom. Succession planning responsibilities are redefined as “a
key board function” and “a significant policy (and governance) issue … so that a company is not
adversely affected by a vacancy in leadership.”

The implications seem clear: boards will have to set more specific standards and requirements for CEO
succession, take responsibility for results, and exercise discernable independence in the process.

Against this backdrop, this report seeks to answer three questions: What is the likely impact of this policy
reversal? How will it practically affect the board? What should shareholders know about CEO succession
plans, and why?

Accepted Paper Series

9] Ed's Dilemma: Succession Planning at Niagara Paving

Pramodita Sharma
Wilfrid Laurier University

Entrepreneurship Theory and Practice, Vol. 32, Issue 4, pp. 763-774, July 2008

Abstract:     
Ed Merski, the founder of Niagara Paving, a successful asphalt company, must decide whether and on
what terms to invite his youngest child Nancy to rejoin the family business. Nancy has worked in a
number of jobs in and outside Niagara Paving and soon will graduate from a master of business
administration program. Ed is concerned about how her entry will affect not only the operations of the
business, but also relations among employees, including his son, Luke, who has worked for the company
for the past 20 years.

Accepted Paper Series

10] Succession Planning in Polish Family Businesses: An Exploratory Investigation

Aleksander Surdej
affiliation not provided to SSRN

Krzysztof Wach
Cracow University of Economics

EXPLORING THE DYNAMICS OF ENTREPRENEURSHIP, pp. 62-74, Aleksander Surdej and Krysztof
Wach, eds., Adam Marszałek Publishing House, 2010

Abstract:     
The main aim of the paper is to identify the succession strategies (especially the ways in which they
attempt to balance the strive to maintain family’s control over the company with the goal of firm’s growth)
of the first generation of Polish entrepreneurs. Research survey was conducted on a random sample of
496 family enterprises in first quarter of 2009 (first phase, survey) and 61 family enterprises in third
quarter of 2009 (second phase, in-depth-interview). Research project “Succession Scenarios in First
Generation of Polish Entrepreneurs” was conducted in the years 2008-2010 by Aleksander Surdej and
Krzysztof Wach was financed by Polish Ministry of Science and Higher Education (Project no.
1326/B/H03/2008/34).

Keywords: family firms, succession, Poland, family entrepreneurship

11] The CEO's Guide to Succession Planning: Managing Risk & Ensuring Business Continuity

Steve Bonadio
Softscape

July 1, 2010

Abstract:     
Succession planning focuses on managing risk and ensuring continuity across all levels of the
organization – risk of untimely departures of critical personnel, risk of retirees taking their skills and
knowledge with them and leaving nothing behind, and risk of losing high value employees to competitors.
It does so by helping your business leaders to identify top performers within the organization, create
dynamic “talent pools” of this critical talent that other leaders can leverage, and prepare and develop
these high performing employees for future roles.

If this was easy, everyone would be doing it. The problem that exists today is that succession planning is
barely automated, let alone optimized. This CEO guide provides five key tips for jump starting your
succession planning efforts.

Keywords: Softscape, Business Continuity, Succession Planning, Risk Management, Automate, Reduce
Costs, Talent Pools, Talent Mobility, High Performers, Integrated, Business Processes, Guide, CEO,
Ebook, Executive, Human Resource, HR
12] Succession Planning: Rise of the Talent Ecosystem

Steve Bonadio
Softscape

September 12, 2008

Abstract:     
Once reserved for the upper echelons of senior management, and often viewed - erroneously so - as
replacement planning to mitigate risk (e.g., a catastrophe befalls company leaders), today's succession
planning is being redefined. The discipline has broadened in both breadth and scope to become a central
component of strategic human capital management (HCM).
Defined as the process of identifying, preparing, and tracking high potential employees for promotion and
advancement, several dynamics are driving the evolution of succession planning today.

Keywords: succession planning, talent ecosystem, HCM, human capital management, software, people
management, talent management, people management software, succession

13] Succession Planning: RWE Ready

Gerry Yemen
University of Virginia - Darden Graduate School of Business Administration

Martin N. Davidson
University of Virginia - Darden Graduate School of Business Administration

Darden Case No. UVA-OB-0881

Abstract:     
Always a thorny issue but it had to be asked. Who was next in line? Management succession is a
significant issue in many firms. Executives put all their energy into the business. But how much time is
spent on bench strength planning? And what happens if the CEO is not ready to hand the reigns over and
begin a life outside the office? This case presents transition challenges that many companies currently
face - the retirement age of baby boomers and the takeover of the C level suite by the next generation.

Keywords: business planning, long-range planning, management skills

14] CEO Succession Planning: Who’s Behind Door Number One?

David F. Larcker
Stanford University - Graduate School of Business

Brian Tayan
Stanford University - Graduate School of Business

Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and
Controversies in Corporate Governance No. CGRP-05

Abstract:     
One of the most important decisions that a board of directors must make is the selection of the CEO of
the company. And yet survey data indicates that many boards are not prepared for this process.

In recent years, shareholder groups have pressured boards to increase transparency about their
succession plans. While the SEC initially allowed companies to exclude from the proxy shareholder
proposals that would require more disclosure, the agency has since reversed its position.

What type of disclosure can provide shareholders with insight into succession planning?

Related teaching case ($):

Multimillionaire Matchmaker: An Inside Look at CEO Succession Planning (SSRN)

The Closer Look series is a collection of short case studies through which we explore topics, issues, and
controversies in corporate governance. In each study, we take a targeted look at a specific issue that is
relevant to the current debate on governance and explain why it is so important. These free instructional
materials may be used in the classroom and by practitioners who want to develop a more sophisticated
understanding of governance practices.

Keywords: succession planning, disclosure, board of directors, corporate governance