CEO Succession: Is Anyone in Charge?

A new study shows that CEO succession plans are often more talk than action, Fortune says.

It’s the crisis scenario that you hope never plays out: The sudden stepping down of a chief executive, whether it be for mismanagement, illness, or a boardroom coup. That’s what happened at United Continental Holdings back in September, when CEO Jeff Smisek abruptly resigned over revelations that the company was the subject of a federal investigation into the airline’s relationship with the head of the New Jersey Port Authority. He was replaced by Oscar Munoz, notably not an operating executive but a member of United’s board of directors. The obvious inference was that no one in upper management had been groomed for the job. But Munoz pledged to rebuild confidence in the struggling airline, and the company’s stock began to recover from its earlier decline. (Fortune) And then he had a heart attack.

When Munoz was admitted to the hospital, United’s board was stymied by the lack of information regarding Munoz’s condition. (TV Newsroom) The episode highlights the apparent fact that United did not have a solid succession plan for temporary or permanent absences of the CEO.

A similar situation happened at McDonald’s several years ago, when 60-year-old CEO Jim Cantalupo, died of a heart attack in 2004. The board hastily replaced him with 43-year-old Charlie Bell, who died nine months later. Wendy’s CEO Gordon Teter died at age 56 in 1999; his predecessor, James Near, had died in 1996 at age 58. (Chief Executive)

The TJX Companies, Inc. off-price retailer of apparel and home fashions, has announced that its Board of Directors has approved a CEO succession plan, according to The Board intends to elect Ernie Herrman (54) to the position of Chief Executive Officer, effective at the beginning of the company’s next fiscal year, January 31, 2016.

While TJX didn’t elaborate on any other executives they were moving up the ladder and grooming as the next CEO, they do show a history of grooming executive. In their public statement, TJX noted that Herrman had been President of The TJX Companies since January 2011. He was named Senior Executive Vice President, Group President, in August 2008, with responsibilities for The Marmaxx Group, the company’s largest division, HomeGoods and TJX Canada. Herrman served as President of The Marmaxx Group from January 2005 to August 2008 and also held various senior merchandising positions with TJX.

If they continue to follow this pattern, they hopefully won’t find themselves in the same position as United Continental or McDonald’s.


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