Good morning. When a chief executive succession race narrows to just a few contenders, losing doesn’t always mean losing out. I’ve noticed lately that some high-profile CEO contests have resulted in hefty compensation packages for the executives who came in second.
The big bucks reflect the big stakes of retaining top talent. A leader who has ascended to the level of CEO contender is likely a high performer with broad institutional knowledge and deep relationships, both inside and outside the firm. Such a star walking out the door can scramble organizational operations, ruin team morale, and dent a company’s bottom line. Top executive turnover typically costs many multiples of the person’s annual salary.
FW Cook’s report examined 100 large‑cap U.S. companies and identified 47 that swapped out their CEOs between 2016 and 2020. At roughly a third of those companies, boards rolled out succession-related retention grants to 39 named executive officers who did not become CEO.
Companies were more than twice as likely to hand out the grants if they hired external CEOs, suggesting “there’s greater concern” about an executive exodus with an outsider chief executive than with an internal promotion, Pizzitola says.
