Boards Are More Likely to Review Temporary Succession Plan Amid Pandemic
March 20 2020 - 5:47PM
Dow Jones News
By Mark Maurer
Temporary succession planning could become a more pressing issue
in the coming weeks, as companies prepare for the possibility of
executive absences related to the coronavirus pandemic, governance
experts say. Finance chiefs, long seen as a steady hand within an
organization, are likely contenders to temporarily fill a chief
executive or chairman post if needed.
Tobacco giant Altria Group Inc. on Friday said its finance
chief, Billy Gifford, will assume authority and responsibilities
for Chairman and Chief Executive Howard Willard, who contracted
Covid-19, until Mr. Willard returns from his leave of absence.
The potential effect of the pandemic on executives' health will
likely make corporate boards more cognizant of succession plans,
said Charles Elson, a corporate governance professor at the
University of Delaware. Most boards already have an emergency
succession plan, a standard part of good governance, but few are
likely to be prepared for the rapid spread of the new coronavirus,
Mr. Elson said.
CFOs have intimate knowledge of the companies they serve --
often more than an operations chiefs or board member. That
expertise gives comfort to the board members tasked with finding a
last-minute, short-term replacement, said Peter Crist, chairman of
recruiting firm Crist Kolder Associates. "They can see inside the
enterprise -- what has to be addressed or adjusted on a near-term
basis," Mr. Crist said.
Nearly 7% of sitting chief executives at a Fortune 500 or an
S&P 500 company in 2019 came directly from a CFO role inside or
outside the company, the same percentage from the previous year,
Crist Kolder data show.
As the coronavirus pandemic disrupts businesses and economies
globally, CFOs have spearheaded efforts to preserve cash and revise
financial planning, and make difficult decisions about layoffs,
financial guidance, store closings, share buybacks and
dividends.
If elevated to the CEO role, CFOs have the opportunity for a
more effective level of leadership in the company, Mr. Crist said.
"A person has to just adopt a communicating style of addressing
everything with frequency and that will be a challenge for some
CFOs," he said.
Altria's Mr. Willard is one of the first CEOs of a major U.S.
company to be hit by the fast-spreading virus. A spokesman for
Altria declined to comment beyond the company's announcement.
BT Group PLC, a London-based telecommunications company, said
CEO Philip Jansen tested positive for coronavirus. He said his
symptoms were mild and he would continue to lead the company,
working remotely.
U.S. companies have wide discretion when it comes to disclosing
medical information about top executives, lawyers have said, and
there is no legal requirement compelling companies to do so.
Most boards have been in close enough contact with the
management team that they know the capacity of the C-suite officers
very well, said Peter Gleason, chief executive of the National
Association of Corporate Directors.
But amid the pandemic, boards would also need to prepare a
scenario in which the emergency successor is also ill because he or
she was in the same environment as the executive who contracted the
virus, he said.
"Is there somebody a layer down who can man the ship for a short
period of time?" Mr. Gleason said.
Write to Mark Maurer at mark.maurer@wsj.com
(END) Dow Jones Newswires
March 20, 2020 17:32 ET (21:32 GMT)
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