April 27, 2024 / VOLUME NO. 311

Succession Stumble

The founder and former CEO of the world’s largest hedge fund, Bridgewater Associates LP’s Ray Dalio, finalized his retirement in 2022, following one of the longest running succession nightmares ever. 

A former senior Apple executive took the co-CEO job in 2016 and then left after less than a year. Another went from being co-CEO and co-chief investment officer to co-chief investment officer. One co-CEO sued the firm for discrimination, and another left to run for the U.S. Senate.

Succession stumbles aren’t limited to financial firms. After Bob Iger took back The Walt Disney Co. CEO job from his successor in 2022, he faced a proxy battle with activist investor Nelson Peltz’s Trian Fund Management this year, who accused the company of underperformance and the board of failing to identify a successor. Trian didn’t get shareholders to approve its two board candidates this month, but Iger said that succession was the Disney board’s "No. 1 priority" in a recent appearance on CNBC. "I’m not going to be here forever," he said. “It’s really important to name the right person at the right time."

Many companies struggle with succession planning. A CEO might have a hard time giving up authority, but succession planning is a critical board responsibility.  The board should oversee effective leadership development that allows the people who know the company intimately to develop skills and take on more responsibilities. 

Bank boards aren’t overly enthusiastic about their performance in this area. Bank Director’s 2023 Governance Best Practices Survey found last year that only 38% of responding directors and CEOs thought their board was very effective at establishing a succession plan for the CEO or key executives. Forty-two percent thought the board was somewhat effective. 

Too often, an ill-considered succession plan can result in a bank’s sale. But with few industry mergers and acquisitions to solve the retiring CEO problem, it will be hard for some boards to sell their way out of succession. 

• Naomi Snyder, editor-in-chief for Bank Director

'Higher for Longer' Forces Rethink of Deposit Strategies

Deposit costs continue to rise, pressuring bankers to strike a balance between growing these funds and pricing them competitively.  

“The existential risk is in not addressing the new environment. If you are waiting around for a return of yesteryear, that’s not going to work.” — Neil Stanley, The CorePoint 

• Laura Alix, director of research for Bank Director

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