CEO Succession Planning and Board Stewardship
Governance Insights 2026
Mission Critical: CEO Succession Planning and Board Stewardship
Authors: A aron Atkinson, Shari Cohen and Jon Bilyk
A board that ignores CEO succession planning does so at its peril. The scope of directors’ oversight function seems to be ever-expanding, with artificial intelligence, cybersecurity, trade wars and geopolitical instability featuring daily in the governance newsfeed. By ensuring that the right person is in the CEO chair, and a healthy pipeline of potential successors, the board can position itself to navigate the challenges of tomorrow while demonstrating to investors the accountability and strategic direction they are looking for today. In this Governance Insights article, we discuss the role of the board in CEO succession planning and highlight, among other things, investor expectations regarding board competency to develop the leadership pipeline, succession-related activism and best practices in succession planning and CEO transitioning. Succession Planning: A Staple of the Corporate Governance Guidebook A fundamental tenet of Canadian corporate law is that shareholders elect directors to supervise the management of the business and affairs of the
corporation. This critical stewardship role includes providing for the day-to-day management of the organization through the selection and supervision of qualified executives, chief of which is the CEO. CEO succession planning (a term that captures the board’s responsibility to plan for the corporation’s leadership needs and transitions) is now a pillar of modern corporate governance. The Canadian Coalition of Good Governance describes CEO succession as “[o]ne of the core responsibilities of the board,” and the Canadian Securities Administrators expect that a board’s written mandate will provide for express responsibility for “succession planning (including appointing, training and monitoring senior management).” Across the pond, the Financial Reporting Council’s UK Corporate Governance Code , which sets out corporate governance standards that are applied by companies listed in the United Kingdom under a comply-or-explain model, provides that the board should establish a nomination committee to ensure that plans are in place for the “orderly succession” of senior management and to “oversee the development of a diverse pipeline for succession.”
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Governance Insights 2026
Governance Insights 2026 Mission Critical: Ceo Succession Planning and Board Stewardship
Investors Expect (and Activists Will Demand) Proactive and Strategic Succession Planning from Their Boards C-suite resignations have historically followed in roughly 15% to 30% of public demands directed by activists at Canadian public companies, highlighting the extent to which executive succession has become a hot topic for issuers and investors alike. Boards that leave succession issues unattended, particularly when the market views current leadership as underperforming, invite succession-related activism, not least because activists will often point to the CEO as the reason for lagging performance. A board overseeing an underperforming company would therefore be well-advised to anticipate activist intervention and consider accelerating its succession plan to address shareholder concerns head-on. Increasingly, investor engagement on succession issues has also demonstrated a growing expectation that boards not simply have a plan, but rather a compelling one that communicates long-term strategy. The importance that investors place on the board’s responsibility for strategic executive succession can be observed in recent high-profile Canadian activist campaigns in which the sitting board’s competency to oversee CEO succession took centre stage. The ousting of long-time Gildan Activewear Inc. co- founder and CEO, Glenn Chamandy, by Gildan’s board of directors in late 2023 prompted immediate blowback from long-standing institutional investors and catalyzed a successful proxy campaign led by Browning West that resulted in a clean sweep of the boardroom and the reinstatement of Mr. Chamandy. Proxy advisers Institutional Shareholder Services (ISS) and Glass Lewis & Co. issued recommendations in support of Browning West’s dissident slate, citing their concerns
with the incumbent board’s decision to terminate Chamandy despite his strong track record and evident support from a largely institutional shareholder base. Importantly, ISS also cited its belief that Browning West’s slate would better manage succession planning at Gildan going forward. When the lululemon athletica inc. board announced the resignation of CEO Calvin McDonald in mid-December 2025 without a successor, the company’s founder and former CEO, Chip Wilson, launched a proxy campaign to elect three of his own nominees. McDonald’s resignation followed on the heels of criticism of his leadership, with activist Elliot Investment Management having recommended its own candidate (a former Ralph Lauren executive) as the preferred replacement for the CEO seat. “The recent CEO change announcement,” Wilson wrote, “was the third total failure of Board oversight with no clear succession plan in place. Shareholders have no faith that this Board can select and support the next CEO without input from a Board with stronger product experience.” These high-profile episodes reveal shareholders’ expectations that the board will have the necessary skillset, experience and resources (and, as discussed further below, a willingness to engage with key shareholders) to identify and select qualified candidates to lead the corporation forward. Activist and other external pressures are prompting boards to demonstrate that they are proactively and thoughtfully tackling planning for succession. The Conference Board, which produces an annual report analyzing CEO succession practices in the Russell 3000 and S&P 500, observed an uptick in CEO turnover in 2025 among top-performing companies. Although reflective in part of the coalescing of pandemic-delayed retirements, The Conference Board noted that the increased turnover among top performers also suggests that CEO succession is being used by boards to signal accountability and
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strategic intent to meet “rapidly changing external demands,” including inflationary pressures and geopolitical risks. In this respect, succession planning is not merely a corrective for poor results or a function engaged episodically in response to an upcoming retirement vacancy or unexpected departure. Rather, it is a significant and ongoing component of a board’s oversight function that can pre-empt activist criticism. For more on Canadian succession-related activism, see our Governance Insights 2026 : “Shareholder Activism in Canada: Surprising Resilience and Shifting Dynamics.” One Size Does Not Fit All: A Bespoke Succession Plan for the Future Succession planning should reflect the unique circumstances of the company, its culture, strategic direction and challenges, and a good plan will represent the board’s consideration of these issues through the lens of succession. The act of planning should be ongoing, even during the early stages of the existing CEO’s tenure. The plan should reflect the future needs of the organization and track the development of the company’s talent pipeline against these needs, highlighting any skill set gaps that may require internal development or external recruitment. Generally, a board’s consideration of potential candidates should not be limited by default to internal candidates only. Investors expect the board to cast an appropriately wide net to source candidates with the right skill set; if there is a lack of confidence in the board’s processes or a failure to adequately communicate a compelling plan, activists have already demonstrated that they will take the initiative to recruit and propose potential successors from outside the company.
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Governance Insights 2026
Governance Insights 2026 Mission Critical: Ceo Succession Planning and Board Stewardship
The CEO Transition and Support In many respects the hiring of a new CEO is not the end of the story but a point in the continuous cycle of development, succession and transition, with the transition being no less deserving of the board’s careful attention than what precedes it. The transition of an outgoing CEO into a new role as a director, executive chair or adviser can add value and stability when it reflects a deliberate succession plan. However, it can also confuse lines of authority if not carefully managed. Where the departing CEO will be a part of the transition, the best practice is for her to serve in an explicitly time-limited role with clearly delineated decision-making responsibility while stepping back from day-to-day management. This process allows the new CEO to establish authority without interference, while still benefiting from the predecessor’s institutional knowledge. In other cases, it may be preferable for the outgoing CEO to simply leave the company altogether. Support and preparedness for senior leadership remain critical as reports detailing the declining rate of CEO tenures and growing disinterest in the position among senior leadership, particularly in the face of challenging instability and increased market pressures, highlight real talent management issues for organizations. Shareholder Engagement and Communication The announcement of a CEO’s departure should be carefully managed to mitigate the risk that the market will be taken by surprise. A board should proactively communicate with shareholders about its succession plan and engage with stakeholders on an ongoing basis to understand their views on the company’s current and future leadership needs. Updates to the market on process, progress and setbacks can signal
Talent development plans for senior leadership should provide opportunities for executive candidates to interact with the board, giving the directors the opportunity to evaluate candidates and the executives a deeper experience that will strengthen the company’s overall talent pool. Regular board review of the plan and monitoring of progress are essential to ensure that the plan stays on track. Delegation of the succession plan management to a board committee (such as a nomination committee) is customary and can bring greater accountability to the process. Although long-term in focus, a succession plan should account for contingencies, such as short-term appointments to fill unexpected vacancies, so that the board is prepared in the event of an emergency. External Advisers An external hiring adviser, such as an executive- leadership consultant, can assist the board with articulating the challenges of tomorrow and the skills needed to meet them. They can also help identify both internal and external candidates, encouraging the board to expand its pool of potential candidates. Legal advisers should also be engaged throughout the succession- planning process to advise the board on its legal and governance requirements, including its disclosure obligations. Legal advisers can also assist the board with strategizing on employment matters regarding the appointment or departure of a senior executive (such as separation agreements, non-competition covenants, change of control and accelerated vesting clauses and compensation packages). Compensation consultants can provide independent benchmarking of onboarding packages, ensuring that terms align with governance best practices and will withstand shareholder and proxy adviser scrutiny. Finally, communications firms can also be of assistance, helping draft clear and consistent messaging for candidates, employees and investors.
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to shareholders that the issue is being managed and can inspire investor confidence in the board’s stewardship. Silence is not always golden, particularly where a CEO’s maturing tenure goes unaddressed by the board, inviting unwanted speculation and activist inbounds. Each succession plan and the communications in respect of it will be company-specific. Canadian Imperial Bank of Commerce’s announcement of its new CEO appointment last year offers an example of proactive shareholder communication regarding a major leadership transition. In March 2025, CIBC announced that its long-serving CEO Victor Dodig would retire on October 31, 2025, and be succeeded immediately by Harry Culham. To ensure leadership continuity, Culham was appointed COO effective April 1, overseeing all of the bank’s operating divisions and reporting directly to Dodig. To further support the transition, Dodig served as a special adviser to Culham
and the board for a six-month period, beginning on Culham’s appointment to the CEO position. The Gildan episode illustrates the potential fallout from a leadership decision that is misaligned with the expectations of key stakeholders, particularly in the absence of a proactively communicated rationale. The unexpectedness of Chamandy’s exit in the face of strong organizational performance was likely made more concerning for shareholders by the fact that the board’s rationale for the co-founder’s departure was delivered after the fact and then only piecemeal over the course of the proxy contest, seemingly undercutting the board’s messaging that its decision was the result of a fully- considered succession plan.
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Governance Insights 2026
Governance Insights 2026 Mission Critical: Ceo Succession Planning and Board Stewardship
Key Takeaways
Succession Planning Is a Continuous Act of Board Stewardship. Investors increasingly expect boards to plan strategically for CEO succession, developing and selecting candidates that align with the organization’s long-term strategic direction. Economic, regulatory, technological and geopolitical uncertainty has made this expectation only more acute as organizations look to manage both present and future risks and opportunities. The board’s development of the succession plan and its tracking of progress and talent gaps should be part of its regular cadence, not an episodic reaction to discrete events, such as a fast-approaching retirement, poor results or an unexpected departure. The plan should, however, build in contingencies for events that are unforeseen, ensuring that the board avoids emergency decision-making. Succession Planning Is Activist Planning: Shareholder Communication and Engagement Is Critical. Succession planning provides the board with an opportunity to communicate with investors about the company’s strategic direction. Engaging openly with shareholders on the issue allows the board to hear the views of key stakeholders on the leadership and directional questions that are top of mind to them. Even where the board is actively engaged in succession planning, a lack of communication can give the impression that the issue has been left unattended, inviting unwanted market speculation and activist intervention. A board overseeing an underperforming company should anticipate activist intervention and consider accelerating its succession plan to address shareholder concerns head-on. In the absence of a well-communicated and compelling plan, activists will not be shy to recruit their own candidates, underlying the need for boards to look both internally and externally for the right fit.
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Key Contacts If you would like to discuss any of the issues raised in this report or receive more information, please contact any of the individuals listed below or visit our website at www.dwpv.com.
Aaron Atkinson 416.367.6907 aatkinson@dwpv.com
Brett Seifred 416.863.5531 bseifred@dwpv.com
Marc Pontone 416.367.7609 mpontone@dwpv.com
Shari Cohen 416.367.7615 scohen@dwpv.com
Researching and writing this report is a project undertaken by Davies Ward Phillips & Vineberg LLP and not on behalf of any client or other person. The information contained in this report should not be relied upon as legal advice.
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Governance Insights 2026
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