By: Paul Gryglewicz & Peter Landers
“Tim Hortons is hiring -- Canada's No. 1 coffee chain is looking for a new leader after the abrupt departure of its CEO. The company announced Wednesday that Don Schroeder, 65, no longer serves as president and CEO after three years at the helm and two decades as an employee.” 1 [i]said in a 2015 press release.
The board’s number one responsibility is CEO succession planning, yet so many boards ignore the criticality of proactively discussing the senior leadership succession plan. While industrial psychologist researchers have identified that some of the most successful CEO successors are those that have been hired from within, most organizations do not have the depth of talent necessary to identify the new captain of the team.
This year’s FIFA World Cup highlights the importance of using defense to create a top-notch offense. The same can be said for Boards of Directors. The board’s best offense is a good defense, and good defense starts with a great fundamental base. That base, in the world of compensation, is the Compensation Philosophy, and that philosophy needs to mirror the business strategy of the company.
CEO compensation governance is fast paced, and it can be seemingly impossible to stay ahead of the ever-changing industry trends. The industry tends to move so quickly that a seasoned executive may not even be aware that they are at risk for creating a Board that is non-compliant when creating dynamic incentive plans for the CEO and other key senior managers.