CEO Entry and Exit: 10 Compensation Strategies

CEO transitions are sensitive events in an organization’s lifecycle. Even amicable departures can touch off heightened scrutiny from shareholders, employees, and customers looking for assurance that the company’s fate will remain in capable hands—or that the new CEO will address grievances that had reached a boiling point. In the glare of publicity, duty-bound to make the right hire, the board’s ability to navigate compensation negotiations can make or break a successful CEO transition.

We’ve helped many compensation committee members (and their other advisors) design the compensation package of an entering CEO. From this experience, we’ve learned where the biggest stumbling blocks are likely to be. In this issue brief, we’ve outlined 10 strategies for overcoming those stumbling blocks and clearing the way for a smooth executive transition.