The Chair's Emergency Succession Memo
The chair of a listed logistics company, Priya, learns on a Friday that the CEO has been hospitalised and will be absent at least twelve weeks. The board charter says the chair may appoint an interim CEO after consulting the governance committee, with ratification at the next board meeting. Priya's governance committee has three members; one is unreachable abroad until Monday. The CFO, who is a candidate for the permanent role, offers to "just act" as CEO immediately. The company has a 40% shareholder, a pension fund, that has previously objected to combining chair and CEO roles. The annual general meeting is nine weeks away and the remuneration report vote is expected to be close. Priya must act before markets open Monday.
1. What process should Priya follow before markets open on Monday, and what are the risks of the CFO's proposal?
Read the worked answer
Priya should work within the charter rather than improvise. She should attempt to convene the governance committee, even by telephone, and document that one member was unreachable; most charters permit consultation with available members, but she should not treat silence as consent. If the committee cannot be quorate, she should convene a full board meeting at short notice, since the charter's ratification step is a floor, not a ceiling.
The CFO's "just act" proposal is risky for three reasons. First, it conflates an operational stopgap with a board appointment, bypassing the authority the charter reserves to the chair after consultation. Second, it creates a conflict: a self-selected interim CEO who is also a permanent candidate can shape information and entrench candidacy. Third, it hands the 40% shareholder a governance grievance before a close remuneration vote. A defensible route is to appoint an independent director or the COO as interim, keep the CFO in the CFO role, and record the reasoning in minutes.
2. How should the board manage disclosure and the pension fund relationship in the following week?
Read the worked answer
The absence of a CEO is potentially price-sensitive, and the interim appointment is a board decision. The company should prepare a factual announcement covering the CEO's absence, the interim arrangement, the authority under which it was made, and the expected timetable, coordinated with its disclosure obligations and advisers. It should avoid medical detail beyond what is necessary and avoid speculation about the permanent appointment.
With the pension fund, early engagement beats surprise. Priya should offer a call before or alongside the announcement, explain that the chair and CEO roles remain separate, and describe the process for selecting a permanent CEO. Because the remuneration vote is expected to be close, the board should also be ready to explain any interim pay arrangement. The key judgement is that transparency about process protects legitimacy even when the outcome is unwelcome to a major shareholder.