Interim CEO: Frequently an Intergral Element to a Successful Transition

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Optimally, a CEO departure announcement includes naming the new CEO. This is often the case when the current CEO gives the board ample notice of retirement plans, or if the current CEO is being promoted or re-assigned within the parent company. And, if the CEO departure is the result of an ongoing performance issue, the board should be prepared to announce the new CEO immediately.

However, in practice naming an interim CEO is frequent. Reasons are varied (1), and include:

  • A succession plan is lacking or not up-to-date. The board isn’t prepared to name a successor CEO.
  • The CEO needs to step away from his/her role for a period of time – often for a personal or family health issue – but expects to resume the CEO position.
  • The board believes it’s in the best interest of the company to appoint an interim CEO. Perhaps the desired CEO is not available immediately, or the board decides to deviate from the succession plan for whatever reason.

    • Roles of Interim CEOs


    While interim CEO roles can be as varied as reasons for needing interim CEOs, below are primary roles interim CEOs fill.

  • Keep the company on course and on strategy until a permanent CEO is selected.
  • Execute a company turn around – usually following CEO and/or company performance issues. The interim CEO is more likely to be selected from outside the company, and have turnaround experience.
  • “Trying out” a potential permanent replacement can indicate the board is leaning toward selecting this individual as CEO, but need to see how the individual handles the position temporarily.

    • What’s critical for any interim CEO appointment is clarity between the individual and the board on responsibilities and primary objectives. It’s critical for the interim CEO to have ready access to board members. Consistent support from the board is critical for the interim CEO, for company employees and for external shareholders/stakeholders watching closely to assess company leadership and overall stability.

    Importance of Acting Swiftly


    In general, an interim CEO is needed due to a former CEO’s sudden departure. However, in some cases the need for a new CEO – interim or otherwise – was clear much earlier than the decision was made.

    Sometimes when a CEO becomes ill, they and the board choose to believe – sometimes with diagnoses and inability to carry out responsibilities indicating otherwise – the CEO’s illness will not prevent him/her from maintaining a reasonable productivity level. The fear of negative impact, internally and externally, from announcing this “weakness” sometimes prevents timely disclosure of reality.

    Example (2, 4): Apple’s Steve Jobs both refused to accept appropriate cancer treatment and board recommendations to disclose his illness. Rather, he elected (allowed by the board) to keep his illness secret. He later took a leave of absence. Tim Cook took on the role of interim CEO three times (2004, 2009 and 2011) before actually being named CEO.

    Similarly, given performance issues, the board should be particularly well prepared to name a new CEO.

    Often the reluctance to disclose the situation, and move forward with a new CEO is based more on emotional responses than on objective assessment of what is best for the company.

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    Looking Forward


    Several sudden CEO departures have been in the news within the past year. Each situation varies. However, what appears consistent is a board ill-prepared for the CEO’s sudden departure. Given the acknowledged importance of succession planning, it’s concerning to witness multiple situations where succession plans are not simply implemented.

    Per The Conference Board (3), boards spend an average of two hours annually discussing succession planning. Clearly the topic deserves more attention.

    Recalibrating Actions:

  • What is the status of your company’s succession plan? Is it up-to-date? Does it include contingency plans? Does it encompass roles below that of the CEO? Does it include replacement plans for those who step up to fill an open role?
  • Ensure there is a written agreement in place between the board and the CEO that addresses unexpected situations like a personal or family illness. Then, if such a situation arises, it is the board’s responsibility to follow through on the agreement.
  • Succession planning – certainly inclusive of, but not limited to the CEO – is a primary responsibility of the board, and should be treated as such. This will require considerable time on the board’s part to understand the status, skill sets, experience, gaps, and aspirations of leaders lower than the CEO – in some cases multiple levels below.
  • Ensure you are having discussions with your board frequently to provide status updates on various leaders, new hires, etc. As well, discuss openly how and when announcements of changes will be handled by the board to maintain the greatest company stability and lessen negative external impact.
    • Sources:
  • Saporito, Dr. Thomas J., Succeeding as an Interim CEO: How boards and temporary chiefs can work together. , Chief Executive , March 11, 2016
  • Stevens, Laurie, M.D., Rolfe, Steven, S., M.D., A Healthy Approach to CEO Illness: How should companies cope with a leader’s health crisis? , Chief Executive , March 4, 2016
  • Semadeni, Matthew, Mooney, Christine H., and Kesner, Idalene F., Interim CEO: Reasonable Choice or Failed Selection? , The Conference Board, June 2014
  • Friedman, Lex, Apple Turns to Tim Cook to Replace Steve Jobs , Macworld , August 24, 2011