The Resignation Email Arrives at 6:12 A.M. What Now?

The essential question isn’t whether pay belongs in succession planning, but when and how to use it. Compensation can help retain critical leaders and reinforce a clear talent strategy, but it should be designed into the plan years before a transition or crisis—not deployed mainly as a reactive counteroffer when a high-potential executive is already at risk of leaving.

Most companies have a succession planning process. Fewer have a succession implementation playbook. That distinction matters. While a plan may identify who is ready, an implementation framework anticipates ripple effects: Who may leave or be passed over? What pay actions and insights into executive vulnerability may be required? How will internal equity be affected, and how should the board sequence these decisions?

The findings surface the next stage of this boardroom conversation through interviews with deeply experienced directors and Farient leaders. Among the questions:

• How can companies move from succession planning to implementation?
• How can compensation committees expand their pay lens to a broader talent-risk oversight role?
• How can a potential leadership shock be managed into a smooth transition that doesn’t undermine shareholder value?

Increasingly, proactive boards are asking not only who could step in, but how likely the next disruption is, where the organizational blind spots are, and whether the company has aligned talent development, retention strategy, and compensation architecture before a departure forces its hand.

That is the arc traced in recent years by Corporate Board Member and Farient Advisors. The annual research began in 2023 with a broad warning headlined “Turnover at the Top” and has steadily moved deeper into succession readiness, retention risk, and the tools boards need to anticipate leadership disruption. The forthcoming 2026 research, due in September, will push the discussion further by examining the board’s role not merely in CEO succession but in transition planning, an essential part of a broader, earlier talent-risk discipline.

Turnover Moves From HR Issue to Board Risk

The first year of the CBM/Farient research collaboration captured a boardroom already on alert. Directors were expecting more movement in the senior ranks: 64 percent said they expected to lose a member of the C-suite within two years, and 57 percent had already experienced some voluntary turnover. The most vulnerable group, according to directors, was not the CEO but the CEO’s direct reports, followed by leaders one or two levels below them.

That finding widened the lens. Succession risk was not simply a question of finding the next CEO; it was also a question of whether the leadership team beneath the CEO was stable, engaged, and ready. The 2023 research found that culture, career growth, and compensation all mattered to retention, but directors placed particular emphasis on company culture and the employee experience. Many also signaled a willingness to use special retention awards where necessary, even if doing so invited shareholder scrutiny.

CEO Bench Strength Takes Center Stage

By 2024, the research had moved from recognition of turnover risk to a more pointed question: How ready are boards for a sudden CEO departure? Conducted amid a series of high-profile exits (see sidebar), the survey found that 61 percent of directors said recent CEO departures had triggered new conversations about senior executive turnover and succession planning. For 40 percent, those discussions had moved from the committee level to the full board.

The shift was significant. It suggested that succession was being treated as a full-board enterprise risk. The 2024 work pressed directors to look more closely at CEO bench strength, mission-critical roles, early warning signs, and the conditions that affect whether potential successors stay long enough to be viable.

Within that framing, the annual succession review looked increasingly insufficient.

From Emergency Planning to Predictive Signals

The 2025 research advanced the argument further, from reactive succession planning to predictive succession-risk management. It found that 59 percent of directors at large public companies had experienced at least one sudden departure among their top 10 executives in the previous two years. Yet 72 percent rated the likelihood of another such event at less than 50 percent, and only 41 percent said they felt very well prepared for sudden departures.

That gap between experience and expectation is the heart of the governance challenge. The 2025 findings pointed to uneven access to forward-looking turnover projections, limited visibility into the organizational cost of surprise exits, and lingering overconfidence in plans that may not be supported by real-time talent data. The report also underscored the economic stakes: external CEO hires can cost about 30 percent more than internal promotions once special awards are factored in.

The Execution Test

This year’s research arrives as boards face the next logical succession test: execution. It will examine the evidence behind director confidence, readiness data, retention-risk analysis, replacement depth, scenario planning, and the board’s ability to intervene before a key executive departs.

It will also bring compensation closer to the center of the discussion to ask, “How ready is your board for the unexpected?”

Executive Severance Packages Compared

Recent high-profile corporate transitions reveal that sudden CEO exits do not universally result in massive financial burdens for investors. Instead, corporate boards are increasingly utilizing strict governance structures, policy enforcement, and clawback clauses to safeguard company assets during executive crises.

While standard, no-cause structural terminations like that of Laxman Narasimhan (Starbucks) still require substantial multi-million-dollar severance outlays, ousters triggered by ethical policy violations—such as Rodney McMullen (Kroger) or Ashley Buchanan (Kohl’s)—demonstrate that boards can effectively mitigate shareholder costs by enforcing immediate compensation forfeitures and forcing the repayment of unearned bonuses.

Starbucks Corp. data derived from SEC Form 8-K (filed August 2024) and the company’s Executive Severance Plan. Narasimhan’s final baseline cash severance was calculated at two times his base salary, plus prorated performance stock vesting through the 2026 fiscal year conclusion. Stock performance tracks the immediate equity response to the simultaneous hiring announcement of Brian Niccol.

The Kroger Co. data: Forfeiture parameters sourced from Kroger’s SEC Form 8-K (filed March 2025) detailing executive separation terms under the company’s 2019 Long-Term Incentive Plan. The figures include the cancellation of $11.2 million across unvested performance units, stock choices, and immediate fiscal year bonus eligibility following a board review of Policy on Business Ethics violations.

Kohl’s Corp. data: Separation metrics retrieved from Kohl’s SEC Form 8-K/A (filed May 2025). Disclosures detail a “For Cause” separation for non-compliance with the company’s Code of Conduct, resulting in a full zero-dollar severance posture, complete forfeiture of unvested equity, and legal demands for partial repayment of his $2.5 million sign-on bonus.