The interest shown in ANZ Bank's announcement that it has extended its CEO's contract by 3 months highlights the importance of succession planning especially for listed public companies.
In ANZ's case, the discussion centres on when should a successful CEO retire, should the successor be external or internal and whether the Chairman (who has been a director for 15 years, 11 as Chairman) should also be replaced.
In governance terms, the issues are how do you achieve renewal and "refreshing" of a successful and experienced Board and how do you ensure you attract and retain senior managers who could succeed to the CEO position.
ANZ's current CEO was appointed in 1997. One of the Board's most important roles is succession planning and ensuring that transitions are smooth. Fixed term employment contracts tend to fix attention on particular dates rather than the changeover itself.
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