More directors of public companies in the US say succession planning is their top priority than those who believe the adoption of AI and managing geopolitical risk should head the agenda.
Compared with 2024, the number of directors that cited succession planning as a difficult issue to oversee has more than doubled, according to What Directors Think 2025 – an annual survey conducted in partnership with Diligent, Corporate Board Member, and FTI Consulting.
Part of the reason directors believe succession is so important can be seen in the finding that 17% of directors admitted the effectiveness of their succession planning was “poor”.
Notably, said the report authors, the data came following a spike in CEO and senior executive departures over the past year. Citing the news of Bob Iger leaving Disney, executive director at Diligent Institute Dottie Schindlinger said: “Boards are seeing CEO departures, particularly unplanned departures, as a real source of risk. They view it as something that can completely upend their strategy for the year.”
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Surveying more than 200 directors in the US from publicly listed companies, 34% of respondents said succession planning for CEOs and C-suite executives was the top priority for 2025, with more directors are selecting succession planning as a top priority compared to other pressing factors, such as adopting AI (27%), workforce planning (26%), improving cybersecurity (25%), and managing geopolitical risks (10%).
“Succession planning at the CEO and senior executive level” was second only to strategy on the list of issues directors found most challenging today (selected by 30% of respondents), according to the survey results. The number of respondents choosing it has more than doubled since this time in 2024.
Additionally, CEO succession planning ranked third on the list of issues directors wanted to discuss at their next board meeting, suggesting that having the right leaders in place was becoming a greater concern for boards amid increased geopolitical tension and continuing uncertainty.
When asked to grade their board’s effectiveness on its CEO succession planning process, only 21% of directors would go as far to say they had an ‘excellent’ process in place.
Schindlinger in discussion with KPMG senior adviser Annalisa Barrett about the growing importance of CEO succession planning, proposed a five-point plan for CEO succession.
These included the need to ensure that the board was ready to act when a departure occurs. The three common succession scenarios were: long-term planned transitions; unplanned short-term transitions; and emergencies where the CEO is there one day and gone the next. Processes needed to be understood by boards for each of these scenarios.
Schindlinger and Barrett advised that current CEOs should involved in the succession plan so they can provide input on their successor. Sitting CEOs needed to understand that this process was “not a personal affront”, with the governance strategy around each transition scenario required to be transparent, deliberate, and regularly reviewed.
Succession plans needed to be communicated with investors and key stakeholders as documented and transparent succession processes “fostered greater board and governance collaboration and confidence from investors”. The process should be handled by the “right people”, typically a nomination or governance committee, directed by the board chair and informed by the sitting CEO.
Their final recommendation was for boards to understand what type of CEO the company required. “With 2025 and beyond set to be a period of turbulence and uncertainty, the succession planning process needs to define what the business requires for future success rather than looking in the rearview mirror,” stated Schindlinger.
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