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rigorous recruiting
“due diligence” in CEO succession planning
The choice of chief executive is probably the single most important decision any board will make. The price to be paid for making the wrong choice can be staggering. Given the high stakes, today’s best boards not only are demanding a far more significant role in the CEO succession planning process, they are looking for tools that provide as much rigour in this critical decision as they have come to expect in their audit, risk and strategy review processes. Ironically, while most boards will retain top strategy consultants to review corporate strategy plans, investment bankers to review acquisitions, and adopt many other rigorous processes in their decision-making, in the board’s most important decision – the selection of top corporate leadership – rigorous processes have been notably lacking. Beverly Behan and Andrea Plotnick highlight a range of leading-edge practices with respect to CEO succession planning that today’s best boards are using to help them make the best possible choice when it comes to this critical decision. Today’s best boards are intent on reducing that risk of failed CEO successions not only by making CEO and executive succession planning and leadership development a key item on the board agenda, but by bringing a level of rigor to CEO succession that provides the level of due diligence shareholders deserve and will increasingly come to expect in this, the board’s most critical decision.
stock options
timing of stock option grants
Since summer 2006, manipulation of the timing of stock option grants has made headlines across Canada and the United States. This latest scandal rattling corporate America erupted when academics and market regulators scrutinized historical data on stock option grants to insiders and tracked these grants against the market price of the company’s securities. The results were alarming. It was evident that companies were taking advantage of rising market prices and then re-dating stock options to a date when the market price was lower. Consequently, top executives were receiving millions of dollars worth of stock options with virtually no risk. Although clearly counter to the purpose of stock options, which is to align interests of senior management with future growth of the company, timing option grants is not necessarily illegal. Such practice is only illegal if documents have been forged or the timing of options is not properly disclosed to market regulators and the company’s shareholders and in tax returns and financial statements. Kim Willey examines issues dealing with the timing of stock option grants. |
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Francis R. Allen
Borden Ladner
Gervais LLP
Jeffery A. Barnes
Heenan Blaikie LLP
H. Garfield Emerson, QC
Fasken Martineau
DuMoulin LLP
Andrew Fleming
Ogilvy Renault LLP
Jeffrey L. Glass
Blake, Cassels &
Graydon LLP
Carol Hansell
Davies Ward Phillips
& Vineberg LLP
P. K. (Sunny) Pal
Lang Michener LLP
David B. Tennant
McCarthy Tétrault LLP |