Executive turnover has reached unprecedented levels, with S&P 500 CEO departures increasing by more than 20 percent in 2024 and early indicators suggesting 2025 may exceed that figure. Yet, despite this reality, a confidence gap persists: While 59 percent of board members at large public companies report having experienced at least one sudden executive departure in the past two years, 72 percent rate the likelihood that it will happen again at less than 50 percent.
Below, we examine how forward-thinking boards are moving beyond traditional succession planning to build predictive, data-driven talent strategies that transform potential disruption into competitive advantage.
Of the nearly 100 board members surveyed in June 2025 by Corporate Board Member, as part of a research program conducted in partnership with Farient Advisors, among the largest public U.S. companies ($1 billion + in revenue), 59 percent report having had one of their top 10 executives leave unexpectedly in the past two years.
Yet, three-quarters rate the probability of that happening to them (or again) at 50 percent or less, even though expert forecasts consistently call for accelerated turnover, not a return to longer tenures.
This reveals a potential red flag for boards and prompts the question: Are boards operating with outdated risk assessment models, potentially leaving the company vulnerable to talent disruption?
of directors say they’re prepared for a sudden executive departure should it happen
say executive turnover data is included in the company’s ERM
don’t forecast the probability of that risk
don’t receive data informing them of the cost (financial, cultural, etc.) of that eventuality.
Findings from the research confirm that boards recognize executive turnover events as an enterprise risk, yet many may lack forecasting and cost monitoring and may be operating with incomplete information when making critical succession decisions. The disconnect becomes more evident when considering that only 41 percent feel “very well prepared” for sudden departures, despite the overall confidence reflected in their succession planning processes.
This seems to suggest that some succession plans may exist more on paper as a check-the-box exercise than in practical reality and hard numbers. Developing a list of candidates and periodically checking in on their readiness does not make for a robust succession plan. Boards must be careful to differentiate between having a succession plan and having an executable succession plan, particularly when it comes to emergency situations such as the proverbial ‘hit-by-a-bus’ scenario.
Today, succession planning must account for cascading effects that extend far beyond the initial vacancy. When senior executives depart unexpectedly, the impact reverberates through the organization in measurable ways.
Yet, 42 percent of directors say their boards don’t monitor the financial implications of executive departures—a significant oversight given the substantial impact of leadership transitions.
Says Farient CEO Robin A. Ferracone: “When a CEO or other top executive leaves, the impact doesn’t stop at the org chart. It creates a ripple effect—what we call an ‘echo’—that can reverberate across the leadership team. If boards aren’t proactively managing succession and engagement, they risk losing more than just one leader. They also risk losing momentum, institutional knowledge and the trust of the next generation of talent.”
External hires command approximately 30 percent higher compensation than outgoing CEOs.
Internal promotions typically cost 20 percent less, a compelling financial argument for robust internal development programs.
Source: Farient Advisors
Thinking about the financial implications of executive departures, voluntary or not, which of the following costs does your board monitor?
Among S&P 500 companies with new CEOs in recent years, externally hired executives were compensated 12 percent below the outgoing CEO’s latest compensation, while internally promoted CEOs were compensated roughly 30 percent below, according to Farient’s analysis, when excluding special sign-on or replacement awards received upon joining the company or promotional awards for an internal placement.
The impact of these special awards shows an even starker difference: External hires more frequently receive greater up-front replacement or sign-on awards, and the value of such awards is much larger than special promotional grants. Companies will often make external hires “whole” for the ownership or unvested awards they may be losing when leaving their prior employers.
Newly promoted internal CEOs usually do not receive special equity awards. Instead, they are given larger equity grants commensurate with their new role and responsibilities. According to Farient’s study, 100 percent of external hires received some type of special award in the year of hire vs. roughly 30 percent of CEOs promoted from within.
When including the total value of any special new-hire or promotional awards, externally hired CEOs are compensated 30 percent above the previous CEO. By comparison, internally promoted CEOs are compensated roughly 20 percent below the previous CEO.
Among surveyed directors who say their boards track turnover-related costs, the most common are:
Leading boards are transforming succession planning from reactive crisis management to predictive strategic advantage. But this evolution requires boards and their companies to develop new frameworks and metrics. Rather than maintaining simple “ready now” and “long-term” candidate lists, sophisticated boards are implementing staggered development pipelines:
What information do you find most useful, as a director, when assessing and forecasting turnover among your company’s top executives?
“Succession planning isn’t just about identifying the next CEO; it’s about building a resilient leadership pipeline that extends well beyond the C-Suite. Starting at a board level, we’ve reached a tipping point where companies’ compensation committees have expanded their charters to include oversight of human capital. The board needs to ask management two essential questions for starters: What is your executive talent development strategy and what is your long-range succession plan for all C-Suite positions,” says Farient COO RJ Bannister.
“Boards should expect visibility into the full talent life cycle, from attraction and development to retention and transition. That means understanding not only who is ready now but also who is being prepared for tomorrow, and how the organization is managing the risks and economics of internal versus external succession. When done right, succession planning becomes a strategic lever, not a reactive checklist.”
According to the survey, while boards invest significantly in succession planning, effectiveness varies considerably. Only 48 percent of directors rate their CEO succession planning as “very effective,” and just 38 percent say the same for other senior executives.
Compensation is a critical component of executive leadership strategies, but it is no longer sufficient to retain and engage key executives in a dynamic and highly competitive marketplace.
Fully three-quarters of directors participating in our survey said they try to engage succession candidates and key stakeholders by providing them more exposure to the board. That’s higher than the 72 percent who say they make use of special long-term incentive grants for retention purposes—an interesting finding that suggests that career development and organizational connection often outweigh purely financial incentives.
What tools, if any, does your company use to manage talent retention at the executive level?
*Respondents were asked to select all that apply.
Also important to note: The application of retention tools isn’t uniform across companies. While 86 percent of directors apply retention strategies to Named Executive Officers, only 67 percent apply them to CEOs, possibly missing their most critical retention target.
Boards looking to modernize their retention strategies may want to gain a deeper understanding of what motivates individual executives beyond compensation. These include:
Farient generally sees three-year performance periods in long-term incentive plans. This is the most common structure used across client engagements and is reflected in plan designs such as:
Effective succession governance requires structured information flow and decision-making processes that can operate under both planned and crisis conditions. The challenge has intensified in recent years: 47 percent of directors say navigating the balance between good governance and talent retention has become more difficult compared to five years ago.
The survey findings indicate this could be the result of a missed opportunity in the data: While 51 percent say they receive executive turnover projections in their board books, allowing them to better assess the risk and identify potential issues in the culture, the other half say they either don’t receive that type of data or don’t feel it relates to their company.
This fragmented information flow creates vulnerability when rapid decisions are required. Succession planning requires boards to be prepared to make difficult decisions quickly.
Does your board regularly receive forward-looking information on the potential turnover at the top, voluntary or involuntary?
Ultimately, the goal of the succession planning exercise is to move beyond the ability to manage executive transitions toward building an organization that is capable of thriving through leadership change.
To get there, boards may want to consider:
Boards that succeed at succession planning create multiple competitive advantages for their organization, including:
The most sophisticated boards recognize that the goal isn’t preventing all executive departures, it’s ensuring organizational readiness for the inevitable transitions that define corporate evolution. Because the question isn’t whether your next critical executive departure will occur, but whether your organization will be positioned to capitalize on the opportunity it creates.
Immediate Actions (0-90 Days)
Strategic Development (6-12 Months)
Governance Evolution (12+ Months)
Corporate Board Member, a division of Chief Executive Group, has been the market leader in board education for 20 years. The quarterly publication provides public company board members, CEOs, general counsel and corporate secretaries decision-making tools to address the wide range of corporate governance, risk oversight and shareholder engagement issues facing their boards. Corporate Board Member further extends its thought leadership through online resources, webinars, timely research, conferences and peer-driven roundtables. The company maintains the most comprehensive database of directors and officers of publicly traded companies listed with NYSE, NYSE Amex and Nasdaq. Learn more at boardmember.com.
Chief Executive Group exists to improve the performance of U.S. CEOs, senior executives and public-company directors, helping you grow your companies, build your communities and strengthen society. Learn more at chiefexecutivegroup.com.
Farient Advisors LLC, a GECN Group Company, is an independent premier executive compensation, performance, and corporate governance consultancy. Farient provides a full array of services linking business and talent strategy to compensation through a tailored, analytically rigorous, and collaborative approach. Farient has locations in Los Angeles, Newport Beach, New York, Louisville and London and works with clients globally through its partnership in the Global Governance and Executive Compensation (GECN) Group. Farient is a certified diverse company and is recognized by the Women’s Business Enterprise National Council.