The abrupt departure of Citigroup CEO Vikram Pandit in October came as quite a surprise to those outside the bank's boardroom. The directors opted to chart a new course, tapping Citi insider Michael Corbat, who led the bank's Europe, Middle East, and Africa operation, as the new chief executive. But the change also provided a timely reminder that while all eyes may be on the directors and the executives, a company's general counsel has a key role to play in succession planning.
"The role of the general counsel in CEO succession planning is to make sure the board has processes in place that are adequate to address it," says Donna Dabney, executive director of The Conference Board Governance Center. That means ensuring that regular evaluation of the CEO's performance is on the board's agenda, and that directors are reviewing potential candidates on at least an annual basis. One benefit of doing this every year, says Dabney, who previously served as the corporate secretary of Alcoa Inc., is that it "makes it a routine, normal conversation" rather than something that makes executives fear for their jobs.
But facilitating the process isn't always easy. "A good general counsel has to be quite a diplomat at times," says William Ide, former general counsel at Monsanto Company. Now a partner at McKenna Long & Aldridge in Atlanta, Ide is also a director at Albemarle Corporation and AFC Enterprises Inc. Board members may need guidance on how the process should play out, Ide says. "They want to know, 'Am I overstepping my boundaries, or is this what I'm supposed to do?' "
Some CEOs may need coaxing to collaborate in the planning. As the board develops a list of strong contenders, the exec may feel threatened. Nevertheless, Ide says, "the GC needs to surface these issues and say, 'Here's best practice, and here's why.' "
Conversely, if the board tries to exclude the CEO from the succession-planning conversation, the GC should step in. "This is not a process that should occur in isolation from the current CEO," says David Katz, a partner at Wachtell, Lipton, Rosen & Katz. "Sometimes the role of the general counsel," he says, "is to make sure the CEO is playing the appropriate role."