So far in 2025, at least 11 directors have left one or more boards due to their having accepted executive roles at other companies, according to 8-K filings. This development illustrates a new challenge for board succession planning as companies look to other boardrooms to fill key executive roles amid a record high number of CEO departures.
Board members are also leaving seats when they step down from C-suite positions in other companies, largely because of policies that force resignations due to a change in employment. As a result of these moves, boards should increase their focus on boardroom succession planning, particularly for unplanned departures, sources said. Governance professionals warn that boards are often too reactive, as opposed to proactive, when it comes to director succession planning.
And although increased executive turnover doesn't necessarily drive increased board turnover, the growing stakeholder focus on board refreshment, along with burnout and new opportunities for directors, should keep succession top of mind, sources told Agenda.
"The best-governed boards have a succession plan in place so that they can crack open that playbook in the event of unplanned turnover and not be caught off guard," said Jan Koors, senior managing director and head of consulting services at Pearl Meyer. "You should have a list of directors ready for that hit-by-a-bus scenario like you do for CEOs."
Execs Drop Board Seats
Some directors have recently been poached by companies looking to fill CEO, CFO and other positions given their seasoned executive experience, driving them to resign from their boards, sources said.
These board members typically leave due to policies that direct them to submit resignations when they have a change in their day jobs and time constraints from taking on executive positions, sources said.
Some 79.4% of S&P 500 companies had director resignation policies linked to employment status changes as of last year.
Beyond policies, directors often face time constraints when they take on full-time executive positions and soon discover they don't have the ability to do both, sources said. Board members on average spent 285 hours doing their jobs last year, according to BDO, and they expect increasing scrutiny and time requirements for board service in the coming year, according to Nasdaq.
Indeed, this is why most companies limit the number of outside boards their CEOs can serve on, sources said. Some 61% of S&P 500 companies limit their CEOs to just one outside board seat, while 38% limit it to two.
In these situations, directors often think they need to devote all of their time and attention to the new job for a year or two, said Koors. This is a risk boards face when they bring on younger, active executives as directors, sources said.
"When you think about some of the rising issues that boards are facing... I think this is leading boards to want working executives who tend to be younger," Koors said. "But the downside is they've got limited capacity and limited availability versus board members who are retired and probably can take on two or three or four boards because they don't have a day job."
Although directors largely feel confident in their succession planning strategy for the board, sources said boards need to improve proactive planning to avoid unexpected departures. Empty board seats are not as urgent as an empty CEO seat, Koors said, but that doesn't mean boards shouldn't have a pipeline of candidates ready to go.