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Boardrooms are abuzz about human capital. This is largely due to the COVID-19 pandemic’s impact on the workforce, SEC updates to disclosure requirements, and a growing investor consortium prodding companies to get a handle on workforce strategy and related disclosures.
Investors are asking for more details on emergency succession planning, workforce turnover, and the talent pipeline as companies work through leadership changes during the crisis. Directors should be prepared to field questions about succession planning during upcoming engagement sessions.
While the data show a number of companies put CEO succession plans on hold this year, sources say boards need to take a deep dive into the talent pipeline of the entire organization to ensure the right leaders and teams are in place to navigate through future turmoil.
Recent proxies and interviews with a host of experts suggest an evolution in succession planning oversight, one that pushes boards to look beyond the C-suite.
According to a recent survey from Pearl Meyer and Women Corporate Directors, 35% of boards discuss succession planning for the CEO and his or her direct reports, 20% discuss succession regarding the direct reports to the CEO’s direct reports, and 5% discuss succession planning three or more levels below the CEO. These numbers will likely increase, sources say.