Jaime Damon is just one of many high-profile CEOs making headlines for their long tenure, despite pressure from investors and other stakeholders to show they are ready to pass the torch to the right candidate.
Boards not only need to have strong succession plans in place, but to make sure that the CEO is closely involved in building candidate pipelines and personally getting to know those individuals, sources said. Boards also need to be more forceful in triggering succession plans, even if they encounter pushback from incumbent CEOs.
"If the board approaches the CEO and says, 'We would like to talk about CEO succession,' and the CEO feels threatened by that, or if they actively resist that, it's time to find a new CEO," said Peter Thies, managing director at Pearl Meyer.
If CEOs don't have their pulse on a slate of candidates that could replace them, "the board should consider that unacceptable," Thies said. "It's not good risk management for the board and the CEO to feel that they don't have any viable internal [candidates]. That's not good governance."
Boards also need to make sure they get to know CEO candidates.
"Give them some opportunities to engage with board members around things like strategy, around things like culture, around things like what [it takes] to build a growing enterprise," Thies said. "Give them a business reason to spend more time with them."
Directors should also bring coaching firms in to train these candidates and "really focus on explicit assessments and development programs that are based on building the skills and experiences against" the ideal CEO profile, Thies said.