Company boards spend a good deal of time, as they should, planning for who’ll take over for the CEO. Most have a relatively short list of senior executives who are being groomed and evaluated for the job. You know if you’re on that list and where you rank, and there’s generally a set timeline for the CEO’s exit.
So it must have come as an unwelcome surprise to those executives at J.P. Morgan when the board awarded CEO Jamie Dimon a special retention bonus and signaled they’d like him to stay for “a further significant number of years.”
The move suggests the board believes none of Dimon’s successors are ready and the succession plan might need a major overhaul, perhaps opening the door to an outsider when the time comes.
If you were one of those executives vying for the CEO’s desk, the message was unmistakable: your waiting time just got longer. And for some, the board believes you lack the right stuff to lead the ship.
Having a solid succession plan ensures an orderly transition if the CEO should retire, take another top job or be fired. It’s simply good corporate governance. Developing the plan is normally a quiet, methodical process. Paying a whopping retention grant to the CEO scrambles the plan in a very public way.