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One of the many challenges in a CEO transition is determining and defining the continuing role, if any, of an outgoing CEO. As this Semler Brossy article articulates, many factors are at play here — the new CEO’s experience, board dynamics, personal relationships and personalities and the reasons for the transition are all important to consider. Plus the length of time that the outgoing CEO will serve in any continuing role can be another point of contention, with these transition periods typically lasting less than two years.

The article addresses four common scenarios in CEO transitions and the prevalence of each among S&P 500 companies in 2022 and 2023. Here’s the data:

– Scenario 1: CEO Transitions to Executive Chair.

• Prevalence: 48%
• Typical Time Frame: 6-24 months (~65% < 12 months)
• A slight variation on the executive chair role is the much less common vice chair role (used in only 5% of our studied S&P 500 CEO transitions).

 

– Scenario 2: CEO Transitions to Senior Advisor.

• Prevalence: 28%
• Typical Time Frame: 3-12 months (or longer)

 

– Scenario 3: CEO Transitions to Board Member.

• Prevalence: 4%
• Typical Time Frame: 6-18 months (anchored to annual meeting dates)

 

– Scenario 4: CEO Has No Affiliation with the Company.

• Prevalence: 20%

This Spencer Stuart blog says boards in a CEO transition should prepare for the CEO’s “sophomore slump” (i.e., second-year downturn) since the firm’s CEO Life Cycle research indicates this phenomenon is “a very real thing.” The blog gives questions for consideration and stresses that any effective transition plan needs to include working towards strong year two performance as a key element. Since these outgoing CEO transitions typically last less than two years, it would be interesting to see data on whether and how the continued involvement of the outgoing CEO has any impact on this.

– Meredith Ervine