Boards Are More Likely to Review Temporary Succession Plan Amid Pandemic

By Mark Maurer 

Temporary succession planning could become a more pressing issue in the coming weeks, as companies prepare for the possibility of executive absences related to the coronavirus pandemic, governance experts say. Finance chiefs, long seen as a steady hand within an organization, are likely contenders to temporarily fill a chief executive or chairman post if needed.

Tobacco giant Altria Group Inc. on Friday said its finance chief, Billy Gifford, will assume authority and responsibilities for Chairman and Chief Executive Howard Willard, who contracted Covid-19, until Mr. Willard returns from his leave of absence.

The potential effect of the pandemic on executives' health will likely make corporate boards more cognizant of succession plans, said Charles Elson, a corporate governance professor at the University of Delaware. Most boards already have an emergency succession plan, a standard part of good governance, but few are likely to be prepared for the rapid spread of the new coronavirus, Mr. Elson said.

CFOs have intimate knowledge of the companies they serve -- often more than an operations chiefs or board member. That expertise gives comfort to the board members tasked with finding a last-minute, short-term replacement, said Peter Crist, chairman of recruiting firm Crist Kolder Associates. "They can see inside the enterprise -- what has to be addressed or adjusted on a near-term basis," Mr. Crist said.

Nearly 7% of sitting chief executives at a Fortune 500 or an S&P 500 company in 2019 came directly from a CFO role inside or outside the company, the same percentage from the previous year, Crist Kolder data show.

As the coronavirus pandemic disrupts businesses and economies globally, CFOs have spearheaded efforts to preserve cash and revise financial planning, and make difficult decisions about layoffs, financial guidance, store closings, share buybacks and dividends.

If elevated to the CEO role, CFOs have the opportunity for a more effective level of leadership in the company, Mr. Crist said. "A person has to just adopt a communicating style of addressing everything with frequency and that will be a challenge for some CFOs," he said.

Altria's Mr. Willard is one of the first CEOs of a major U.S. company to be hit by the fast-spreading virus. A spokesman for Altria declined to comment beyond the company's announcement.

BT Group PLC, a London-based telecommunications company, said CEO Philip Jansen tested positive for coronavirus. He said his symptoms were mild and he would continue to lead the company, working remotely.

U.S. companies have wide discretion when it comes to disclosing medical information about top executives, lawyers have said, and there is no legal requirement compelling companies to do so.

Most boards have been in close enough contact with the management team that they know the capacity of the C-suite officers very well, said Peter Gleason, chief executive of the National Association of Corporate Directors.

But amid the pandemic, boards would also need to prepare a scenario in which the emergency successor is also ill because he or she was in the same environment as the executive who contracted the virus, he said.

"Is there somebody a layer down who can man the ship for a short period of time?" Mr. Gleason said.

Write to Mark Maurer at [e-mail]

(END) Dow Jones Newswires

March 20, 2020 17:32 ET (21:32 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.