Stewardship | ~5 min read
Taking succession planning seriously
Succession planning is not just good governance – we consider it a strategic cornerstone for companies. But we think too many companies fall short.
Succession planning ensures leadership continuity, anchors long-term vision, and signals to both internal and external stakeholders that a company has a stable strategy.
Leadership transitions are delicate, and boards should proactively oversee succession and onboarding planning. But many companies continue to fall short. For example, in one-tier boards, CEOs too often transition into non-executive chair roles before the end of their term, with no cooling-off period and without the support of investors.
Research by recruiters Robert Half highlights succession planning as a persistently neglected governance topic. Only 47% of 400 executive committee and board members surveyed in Belgium, France, Germany and the UK have such plans.1
The situation is worse for chair roles, where boards tend to prioritise length of tenure and familiarity over the expectations of today’s investors.2
All the while, a looming leadership “age cliff” is making robust succession planning more urgent. Many CEOs are nearing retirement age, with the number of European CEOs in their 60s at the highest level for 20 years at 31%.3
What are our expectations?
While companies understandably avoid naming successors, investors still expect a clear plan to be developed by the board well in advance.
Our engagement seeks to ensure companies have robust, forward-looking strategies for leadership transitions. We want to see succession plans developed that are regularly reviewed. We also expect a pre-defined process – based on a skills matrix – for identifying internal and external candidates. Board accountability is vital. Effective planning prepares companies for both expected and sudden changes, supporting long-term stability.
To this end, we encourage boards to appoint a lead independent director (LID), who will be accountable and actively support the board’s Nomination Committee in developing a robust succession plan for the boardroom.
This year, we escalated our concerns on succession planning by pre-announcing a vote against the chair of Adidas’s Supervisory Board.4 Given that the chair exceeded our overboarding thresholds with, in our view, too many commitments outside Adidas, we sought a clear leadership transition plan.
In previous years, we also opposed former combined chair/CEOs becoming non-executive chairs in France due to a lack of independence as well as unclear transition and succession planning.
The message? Robust succession planning boosts investor confidence, and it is never too early to think about the future.
This is the first of two blog posts sharing our observations from this year's proxy voting season.
See our latest Sustainable Investing and Stewardship Report 2024 for more insight into our engagement and voting activities. Read our analysis of how we voted in 2024 and our policy updates in 2025.
1 Robert Half, Boardroom Navigator, 2023
2 Heidrick & Struggles, The chair imperative : A new mandate for leading in a new world, 2025
3 Spencer Stuart, 2024 CEO Transitions in Europe, March 2025
4 AllianzGI, AllianzGI announces its intention to vote against the re-election of Adidas' chair at its upcoming AGM, 2025
