Once upon a time, choosing a successor to the CEO wasn’t much of a responsibility for the board of directors. Today it’s one of the most important tasks the board has—and one the board should protect carefully, before shareholder activists hijack the process.
Just last week, the Securities and Exchange Commission published new guidance saying it will no longer automatically let companies exclude shareholder proposals about CEO succession from the proxy statement. In a reversal from past SEC views, companies will now need to seek a no-action letter from the agency to keep such questions off the proxy statement. The SEC also implied that boards shouldn’t hold their breaths waiting for that permission to come.
