What is the role of the board in CEO succession planning?

• A. The board approves all executive compensation packages.
• B. The board oversees the search process, identifies potential successors, and ensures readiness and continuity of leadership.
• C. The board conducts day-to-day management of operations.
• D. The board has no role in succession planning.

Answer: (B)

The board plays a key governance role in ensuring leadership continuity by overseeing the CEO succession process, identifying potential successors, and ensuring readiness and continuity of leadership. This involves establishing a formal plan, often through the nominating or governance committee, setting criteria for the CEO role, and creating development paths for internal candidates. The board may arrange external searches when needed, assess candidates against strategy, culture, and risk considerations, and determine the transition timeline and any interim arrangements. This oversight supports shareholder value and stakeholder confidence by providing a deliberate, transparent path for leadership change, anchored in fiduciary duties of care and loyalty. Compensation decisions and day-to-day management are not the focus of succession planning, and the board does have a critical role in this area.