Boards Under Pressure: Succession, Activism, and AI Risks

Steve Odland: Welcome to C-Suite Perspectives, a signature series by The Conference Board. I'm Steve Odland from The Conference Board on the host of this podcast series. And in today's conversation, we're joined by Bonnie Gwin, the vice chair and global comanaging partner of the Global CEO and Board of Directors Practice at Heidrick and Struggles. And she's also a leading voice on governance and board effectiveness. Bonnie, thanks for being with us today.  

Bonnie Gwin: Thanks, Steve. Delighted to be here.  

Steve Odland: So, Bonnie, you've been doing this for a long time. You're an expert on all things boards and CEOs. We will cover a lot of different topics, but let's start with CEO succession planning. You have data that shows that CEOs are staying in their jobs a little longer and we now have a record number of CEOs in their late 60s--that's older than normal. 

At the same timeyou're seeing activists trying to hasten leadership transitions. Talk to us about the current environment.  

Bonnie Gwin: Thank you. It'sa really important topic and we do a lot of surveys on this and I'll share some interesting data. We do a survey called Root to the Top, where we talk to boards and CEOs around the world. 

We just released one of those. Interestingly, 40% of the people that we surveyed, these governance leaders, said that succession is not a priority, which is pretty surprising. And the number who said it was a top priority went down from 28% or 26% in 2024 to 24% in 2025. But what we're seeing is something, I think really interesting, the best practice-- and we're seeing a lot of companies adopt this-- is to focus on succession planning much earlier and to make it a priority. 

Sometimes it's happening right after a new CEO is appointed and becoming just part of the cadence of the board's work and is integrated into their strategic plan. And that truly is a best practice because in the day and age, the era we're living in, there's so much change. There's so much pressure, there's so much public scrutiny. 

Being prepared is really critical. The other kind of interesting data point that is affecting this is when you look at the last five years, on average about 75% of new CEOs were internal appointments. So that says that for most boards being prepared, having a good bench, creating succession options inside is really critical. And that takes time.  

Steve Odland: It isn't the case, but a lot of times when you have to go outside it's a failure of succession planning. Not every case but you're right. You need to start immediately, and I think a lot of boards just relax when a new CEO is appointed and just say, "Okay, now we'll let this run its course." 

But you really have to make sure that not only for the CEO, all the key positions in an organization that you've got bench and that you're developing people, don't you?  

Bonnie Gwin: Yeah, 100%. I think it's good hygiene. It keeps it from being an emergency. When you have given it thought, you may have an emergency, that happens from time to time, or you may need to make a big shift for a strategic reason. But having a regular discussion, having a regular cadence, knowing who is involved, should be the CEO and her or his leadership team. Could be the chief human resources officer (CHRO) in concert with the board. That is truly bestpractice and it should happen on a regular basis.  

Steve Odland: Are you surprised at the numbers, that that we've got so many people in their late 60s, and what does that say about succession planning? 

Bonnie Gwin: One of the things we saw during COVID--which feels like it was a long time ago but it really wasn't-- is that there was not a lot of turnover at the top. And I think that's because, it was a time when boards really valued and prioritized continuity and keeping people in the seat while you navigate the uncertainties that COVID brought. 

And I think there's still some of that in the marketplace. There is a value to having continuity but we are seeing a lot more turnover. We are seeing a lot more boards that are starting to make changes in a more rapid pace than they did three or four years ago. 

Steve Odland: It was a different period. It was a black swan event. And you had so many things that were in flux; let's not add to all of the uncertainty in a company by changing the CEO. It looks like it was a deliberate strategy on the part of the boards to retain them. But then you get this bunching of tenures and you have to now work through that as well. You'veadvised a lot of boards. What do you think are the best practices? How do you advise your boards to plan for this? Is it always that you've got one or two candidates in the pipeline for every one of these key positions? 

Bonnie Gwin:I think the best way is to really step back and, early in a CEO's tenure, for the board leadership to be having a very open conversation with the CEO. This doesn't come as a surprise to anybody. Let's start thinking now about how we're going to develop a bench over the period of your tenure-- which we hope will be a long time but things happen and we want to make sure we're continuing to develop great talent. 

And it really then boils down to a couple of things. I think boards should have open conversations with the CEO about what are the strategic criteria, the strategic needs that this company's likely to have in the next five, 10, 15 years. And then thinking about who are the emerging talents within the company or who can you recruit in who can help guide a company as its strategy evolves? And is forward facing, not looking through the rearview window, but forward facing, thinking about what's going to face us over the next five to 15 years. And you really start aligning on the criteria, which will evolve. It's evergreen and it should evolve on a pretty regular basis. 

I think best practice is for boards to periodically just do an external talent map. It's just a desk exercise. It's not talking to anybody but who's out there? What are other great leaders in our segment, in our industry, that strategically are aligned with where we're going? And exposing internal candidates to assessment, development, exposing them to the board, giving them stretch assignments, thinking about how you very methodically, in a disciplined way, develop people who, when that day comes, are prepared to be considered and can be considered by the board.  

Steve Odland: The point that you made at the start is really important.You have to have a strategic plan. If you're seeking tenure in the five- to 10-year rate, you need a strategic plan for that tenure and that CEO. But then you also need to know what the next phase of that strategic plan is because it may call for different skillsets. And so you can't just have a clone of the current CEO in the pipeline because it may be somebody who needs to be developed on different dimensions. And this is your point. And therefore, the external exercise is also to see what are those skillsets that are out there that could better map to that. But it all starts with the plan, doesn't it?  

Bonnie Gwin: It does. It starts with the strategic plan and really thinking about where's that taking us and what kind of talent are we gonna need in the future.  

Steve Odland: Now, board composition is another piece of that planning too, becauseyou've got skillset needs that need to coordinate with that strategic plan as well. Some boards do a great job of this and turnover and succession and so forth. Some boards don't. And then you've got activists saying you've got boards that have all been in place too long. Talk about how companies should do director succession planning.  

Bonnie Gwin: It's very similar to what we were just talking about relative to CEO planning, on succession planning. It should be continuous, thoughtful, and open and transparent dialogue in the boardroom about what are we going to need in the future. 

I think it often starts with a skills matrix, which is a very simple exercise. What do we have around the table today? And let's map that to the strategy. Where are we going in the next five-ish years and what's missing at the table that would help the CEO and the leadership team by asking great questions, bringing relevant skills and experience? 

We look at AI, for example. That has really changed the game, changed the conversation. Those are the kinds of things that boards need to be attentive to as they build out their own matrix of skills. But it's also the fundamentals: do you have people who can take over the audit chair role? Do you have people who can take over the comp role over time? Do you have people who have worked in the geographies where you're expanding? It's things like that, I think boards need to, in a very disciplined way, have a matrix, identify the gaps relative to the strategy, and then make sure on a continuous basis they're in the market recruiting and having a lot of conversations with people.  

Steve Odland: Now, the pendulum has swung on this. It used to be that people would stay on a board 25, 30 years. You had the same board and they knew the history and so forth, but you weren't getting the fresh thinking about new areas like AI or sustainability, whatever the new strategic areas are. And then the pendulum kind of swung the other way for a while, which is, you need turn 'em over, turn 'em over. And that's more aligned with sort of the European style of governance. Now, the pendulum seems to be back in the middle, which is, you need these staggered tenures. You want some people who have been on the board and been around who understand deeply the company and the history, but you also need new, fresh perspectives as well. So how do you plan for all that?  

Bonnie Gwin: Yeah, it's hard to do because I do think you wanna have a balance. The best boards are balanced. You have some institutional legacy knowledge, and you've got some future thinking and experiences that map to where you're headed. It's really, again, I think about having a very good, independent, whether it's a chair or lead director, a very good head of governance or nominating, whatever the committee is, who collaborate with the CEO to think about who's going to retire? When is that going to happen? What are the skills we're going to miss when they leave? What are the skills we need in addition? And then thinking very methodically about how do we stay in the market on an ongoing basis and get to know people who could fill these needs for us. 

It's essential and it'sjust about blocking and tackling and doing the basics, and just thinking a few steps ahead. Like a chess board.  

Steve Odland: The numbers now are, depending on the size of the company, the boards are between nine and 11 independent directors, on average. Smaller companies have closer to seven. But if you thought about it as one a year not, and it doesn't always flow exactly that way, but if you thought about that and you laid out the cadence of tenures and so forth, and who was gonna go off when. You would then begin to build almost an ongoing search process so that you're talking to people all the time, or every year, that kind of aligned with your potential skillset needs. 

Bonnie Gwin: Absolutely. You build a plan and you work the plan. It's pretty straightforward and you stay disciplined about it and make sure you're talking to your fellow board members to ensure that they're aligned with where you're going on this journey. And the CEO of course. I think if you've got everybody in alignment and you've got a plan then you just, in a disciplined way, make sure you're focused on who we need and don't. I've seen situations where it catches up and suddenly you have three directors that are gonna be rolling off. That's a pretty difficult situation. It's difficult for a board. It's difficult for a CEO. You're onboarding a lot of people. If you can think about it as one or two a year on a pretty regular cadence, that's a good balanced approach.  

Steve Odland: Yeah, even two a year is hard. But when you have even more than that, it changes the culture of the board. It really is disruptive, almost, to the company. And maybe that's necessary if you've got a company that needs a little shaking on the tree. Okay, then that might be one way to do it. But it sounds to me like, you coach people to make this a continuous process that aligns again with the plan.  

Bonnie Gwin: Yeah, we say stagnation is the enemy of sustained performance. Doing what you're doing is not going to help this company sustain performance and even use the board. I believe boards, the best boards, are competitive advantages to a company because they just bring such really interesting thinking and advice and counsel.That's what you really want and that really means you can't sit still. You have to continuously be thinking about refreshment and that can be hard. We survey globally on this topic too. About 28% of the boards that we surveyed globally, we would describe as a strategic refresher. They take this approach. So about two-thirds are not doing this and I think it's an opportunity for every board.

Steve Odland: Yeah. And if you thought about it that way and you thought about a cadence of, one, maybe two, but one per year, you then get into a pattern. You get alignment on tenures and the whole thing just works better. It's more of an ongoing process rather than just waiting until somebody says, "Oops, I'm going to retire from the board." And now you go, "Okay, let's start." And it, that's the worst time. That's the worst way to do it.  

Bonnie Gwin: Exactly.  

Steve Odland: Yeah.  

Bonnie Gwin: I think, especially when you're talking about committees and committee composition, you want to be thinking pretty far ahead. Do I have backups in place for key chair roles? Do I have the right people in those committees? Because that's where a lot of the work is done.  

Steve Odland: Yeah. Great point. Listen, this year, geopolitical risk, you've got wars, you've got the trade situation. The external environment today is probably as dynamic as, if I can use that word, as it's ever been. It used to be able to count that you knew what the tax rates were going to be, what the tax structure was, you knew who your trading partners were going to be. You knew where you could put your supply chain. It's 52 card pickup. Everything isis in flux. 

That's a big job for boards and management teams today. Boards have to be thinking about all of this and then it's more than just a heat map exercise. How are you advising boards to approach all this external uncertainty?  

Bonnie Gwin: One thing, I think, that'sreally critical, is how all of this impacts what you're looking for in a CEO and what you're developing for in a CEO. And let me start there for a second. One of the things I think is very interesting and it's a criteria that has become more and more important in the COVID world and today, and that's agility. CEOs who are agile, who are flexible thinkers, who don't have just a pattern of thinking but rather can flex. They don't have one way of doing things. They listen to a lot of inputs. You need that agility, I think, in your CEO and the leadership team because that'srequired. 

And the other area that has become more and more important is resilience. A CEO who can bounce back, she or he, from whatever. You wake up and you've got an issue to deal with. They need to have the resilience, in part because you have to have the energy to get up and keep going. But alsoit's the message you sent to your board and your entire organization. You want to be resilient. You want to talk about realities but bring hopefulness and direction about where you're going to go next. And so, I think, agility and resilience is something we'readvising boards to stay focused on as you're thinking about developing CEO talent and recruiting or placing a CEO within your organization. 

It's also true, I think, from a board standpoint. Boards, from a composition standpoint, one of the trends we're saying is they're adding more people who understand geopolitical risk. So people who've worked in governments, people who've worked in regulated environments, people who can understand what's happening in different corners of the world. I think that's one way boards have responded to this. Having the right audit and risk chair and thinking about enterprise risk management. Having a very strong framework to manage risks in this environment is critical. And so you need to have the people on the board as you think about composition of the board, who can do that.  

Steve Odland:Yeah, these are really good points. The term "black swan" is a relatively recent term. It means an event that is market moving and, or it's certainly impact on the economy, but by definition it's not an event that you can forecast. An example of that is the COVID pandemic, which hit, as we've discussed before, and froze everybody. If I recall, from 1900 until 1980, there were four black swan events: world War I, World War II, the Spanish Flu, and the Great Depression. Since 1980 or 1981, there have been 17 black swan events. 

So these events are not once in a lifetime or once in a career. They're really once every few years. And so that whole thing has led to the concept of gray swans, which is, alright, you have to start projecting or forecasting some level of black swan events, which are highly, but you, but was very low probability. 

You have to start thinking about this.That's true from a management standpoint but it's really true from a board standpoint, too. And that goes beyond an episodic risk analysis. How does a board get its arms around all that?  

Bonnie Gwin: It's not easy. It'svery complex. You have to have a very engaged board. People who are going to do the work, get to know the company, think about the strategy. I think boards need to ensure that an annual strategy discussion is built into the calendar, and it's evergreen and it's something you don't just discuss once a year, but you do have a deeper dive at least once a year. And you've got a lot of ongoing conversations in a real and meaningful way. It can't just be surface. You have to go [00:18:00] into depth and talk with management about what are various scenarios for these gray swans and black swans. Ask a lot of thoughtful questions to make sure management is thinking about what might be around the corner. 

What I've seen some of the best boards doingis they're bringing in more experts. Sothey'll bring in an AI expert to weigh in on the ethics, what happens to the culture, what happens to jobs. We're seeing more advisory boards of groups, small groups of experts, who can weigh in and be the eyes and ears on these very particular specific topics and bring those messages into the boardroom. 

Steve Odland: About a decade ago, there was this trend that, okay, we need somebody on the board who's an IT expert. You need somebody on the boardwho's a cyber expert. You need somebody on the boardwho's an ops expert. And so you really balkanized the board by skillset. That didn't turn out to work very well because you didn't know what the next black swan or gray swan event was going to [00:19:00] be. So you really need, you need generalists, you need people who have operating experience and so forth, but who are then tapped into these things and are using these other kinds of resources for the narrow and deep issues.  

Bonnie Gwin: I think every board needs a couple of what I would describe as "utility players, " who have the ability to flex across issues and ask really insightful questions.They're not telling management what to do but they're teeing up things that might be difficult for a leadership team to think about, or they don'twanna think about it or they haven't thought about it. They do it in a way that the leadership team can hear it, respond to it, and embrace it. And I think every board needs a few of those. I don't think every board needs, in my experience, everyone to have those qualities. I think you do need some specialists in areas like finance, for example, and chairing an audit committee. But having some of those people who are generalists, as you describe them, but who also are independent thinkers and not afraid to ask what might be a little bit of an uncomfortable question, but might tee up a really interesting vein of areas to debate and discuss and make sure the leadership team is thinking about.  

Steve Odland: Yeah, and one of those issues right now is AI. A few years ago, I'm not sure how many boards and CEOs could spell AI and now it's like everybody's on ChatGPT on their phones. It's amazing how fast things move. Here we are and so boards are trying to figure out what does this mean strategically for a company. You got gen AI, generative AI, which, you know, is helping to drive the top line and differentiation. You've got other forms. But talk about the governance from a board perspective, governance and how they should be looking at AI. 

Bonnie Gwin:It's a huge question because there are so many implications. It's ethical. It's how it's affecting jobs and job structures. It's the rapidity of the technology, how rapidly it's being developed, and just staying on top of that from a governance standpoint. And it'sreally tricky question. 

I don't think there's one solution yet in terms of how boards are going to govern this or make sure that it's got an appropriate discussion in the boardroom and even what committee it belongs to. Where I'm seeing more of these discussions right now is in the executive committee or all the chairs of the key committees. 

But I think it's going to end up having to be owned by the entire board because it is such a big, complex set of issues that are raised by AI. And it's evolving even as we're speaking now. It's probably evolving again in ways that we can't even forecast. So that comes back to agility. The board has to have agility, too. 

Steve Odland: Yeah. You have to be putting it into your risk management process because there is risk about deploying AI in a company. There's data risk and all sorts of intellectual property risks and all of that. But it's also a strategic issue because you know how you do or don't deploy AI can mean the difference between future success and not. And with the speed of these, the adoption of these technologies, if you get too far behind the eight ball, you can really destroy the value of a company. Soit's on multiple dimensions here.  

Bonnie Gwin: Yeah, it really is. And I think companies are struggling with, do we bring in an AI expert to the board or do we have advisors? The risk with just bringing in an AI expert is, unless they're right in the midst of it, their currency can be out of date pretty quickly. Some boards are looking to groups of advisors, education, but I think it's just raising, as you said, so many issues. And it does belong in enterprise risk management, no question. 

Audit and risk needs to have a pretty big footprint here, but it is very strategic. It's commercial, it'sgo to market. The guts of businesses are being transformed and changed. And I think ithas to be part of the ongoing strategic discussions and questions that boards and leadership teams are debating. 

Steve Odland: We at The Conference Board did a recent survey among CEOs and we update it every quarter. Last quarter it was all about tariffs and trade. This quarter we're back to some of the geopolitical issues but also cybersecurity. Again, this seems like the issue that just won't die. Can't we just fix this and get it behind us? But it goes, so much of what we do in the economy, is done through some sort of cyber means, including AI. This seems like a perennial issue. How do boards stay on top of that issue?  

Bonnie Gwin: Again it's AI. It's not easy because it's evolving and the actors who are involved in it are constantly evolving, and staying ahead of that. This one falls, at least at the moment, pretty clearly in audit and risk and enterprise risk management, and making sure that you are thinking about [00:24:00] every possible permutation. 

I also think it's important to have the chief digital officer talking directly to the board or whoever has responsibility for this, on a regular basis. I've seen some boards add chief digital officers for that reason, because some of this language around AI, around cybersecurity, around technology generally. It's moving so fast and you need a translator at times. And having somebody in the boardroom who knows how to frame it up and ask some questions and help bring the board along, I think can be very helpful. 

Steve Odland: Wrapping up, any other issues that you see going on in the board and that you'readvising boards to get their arms around?  

Bonnie Gwin: I think there's a perennial issue also of activists. There's a lot of activism activity that we see in the news. And that's why I think, going back to what we're talking about, regular board refreshment and developing your CEO options, your internal bench, is really critical. 

It helps keep the conversations, having a fresh perspective in the boardroom, which is important. And with the CEO, it helps in terms of just making sure that you are actively evaluating your CEO, you're thinking about the strategy, you're thinking about who on the senior team can step into this role. And you're just staying really close on what are the key leadership issues that the company is facing, as well as the strategic issues. But I think activism is here to stay.  

Steve Odland: Yeah. You have to be good at governance. You have to stay up on the trends. You have to evolve your governance and the company still has to perform. I think sometimes we forget that we're in a multistakeholder world. You can't just be good with your customers and just be good with your employees. You can't forget your owners. You have to do it all. You have to hit the sustainability, the citizenship, community. You have to think about all the components and make it all work as one big equation. 

Bonnie Gwin: It's all about the stakeholders. 

Steve Odland: Yeah, exactly.  

Bonnie Gwin: And that'sa very broad group.  

Steve Odland: Bonnie Gwin, thanks for being with us today and sharing your thoughts on the latest in governance.  

Bonnie Gwin: You're very welcome. Thanks for having me, Steve.  

Steve Odland: And thanks to all of you for listening to C-Suite Perspectives. I'm Steve Odland and this series has been brought to you by The Conference Board.