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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Davies | dwpv.com
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