In this leading company in its financial services segment, it took 6 months to identify a successor CEO. Succession planning is often talked about, but rarely practiced. Did the Nomination and Remuneration Committee slip up big time?
- In a listed entity, with its majority institutional shareholder headquartered outside India, the MD & CEO, who had several years of service ahead of her, decided to tender her resignation without advance notice to the Board, well ahead of the next Board meeting. She had been the MD & CEO for 7 years, and had worked in the Company for over 21 years.
- She offered to continue with the Company till a suitable successor was identified.
- This, being a material development, it had to be communicated to the Stock Exchanges on which the Company was listed.
- In the absence of an identified successor, the press release from the Company could not name a successor. The press release mentioned that “She believes that from a governance perspective, this is the right time to move on.”
- There were a number of rumours on the possible reason for the sudden exit, with adverse implications on the share price. Within the Company also, there was a lot of scepticism, and there was speculation that senior level exits could take place.
- It was stated that the outgoing MD & CEO provided adequate job rotation to the next level, but none of her colleagues appeared to have had been groomed for higher responsibilities. There were different persons heading different verticals/ businesses within the Company.
- Since the responsibility, in the interim, was not formally entrusted to any senior functionary in the Company, there was speculation that no insider was being considered for the top job, even though the Company’s official position was that the search process would look at insiders as well as outsiders.
- A global search firm was hired, and a successor was identified after 6 months of the resignation. Meanwhile, some top exits happened.