A detailed plan can yield a seamless succession.

AuthorVazquez, Steven W.
PositionBOARD SUCCESSION

Ed. Note: Steven W. Vazquez is partner in law firm Foley & Lardner's Transactional & Securities practice. He regularly represents public and private companies in a variety of industries on corporate governance matters, change in control issues, and antitakeover strategies. Evelyn Dilsaver is past president and CEO of Charles Schwab Investment Management and is a director on several corporate boards -- Aeropostale, Tempur-pedic, High Mark Funds, Blue Shield of California, and Russell ETFs -- as well as non-profit boards, serving on audit, governance and nominating committees.

Board members typically possess a valuable combination of intelligence, skills, and experience. Because they play an important advisory and oversight role in a corporation, their loss can have a major impact on the company's short-term operations and long-term prospects for success. Selecting individuals to sit on the board of directors is just as important as selecting senior officers.

Directors must be intelligent, understand the strategic business plan and relevant markets, and work well with other board members. Much like identifying management successors, identifying director candidates is best accomplished through a detailed and regularly reviewed board succession plan.

* Identify Desirable Director Qualities and Skills: The first step in board succession planning is identifying desirable director qualities and skills. The board should review the current directors' professional skills in light of the strategic business plan and determine what, if any, deficiencies exist. The board should ensure that multiple directors possess desired professional skills -- redundancy allows the corporation to sustain the loss of directors without losing core characteristics. Additionally, if the board maintains specialized committees (e.g., an auditing committee), redundancy permits the corporation to rotate committee chairs.

While maintaining a depth of critical skills, the board must look for candidates who offer diverse experience. For example, the board should consider whether a candidate's background makes them well suited to speak for an underrepresented class of stakeholders, or whether a candidate's gender or ethnicity offers viewpoints currently underrepresented on the board.

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* Consider External Recruiting Firms: Approximately 80 percent of board seats are filled by friends or associates of directors and senior officers. This practice may foster...

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