1. Start Early.
The best succession planning starts long before a CEO even contemplates retirement. Experts like Lee suggest there’s no magic age at which to start succession planning, but as leaders move toward their early 60s or within five years of their likely retirement, they need to start thinking about it.
Camden Property Trust – Ric Campo
Credit: cleftwich
While a lot of CEOs, such as Mid-America’s George Cates and AvalonBay Communities’ Dick Michaux, have retired after taking their companies public, Ric Campo at Houston-based Camden Property Trust is still going strong. He was only 39 when the company went public in 1992 but knows that one day he won’t be there to steer the ship.
Campo believes the key to a sustainable company is having great people and developing them. For instance, if a nonfinancial person is rising in the company, Camden sends that person for financial training. The company also sends vice presidents out to speak in front of shareholders, analysts, and rating agencies to give them external exposure.
“We spend a lot of time thinking about [succession planning] and working on it,” Campo says. “It’s about picking the right people, grooming them, and figuring out what their strengths and weaknesses are.”
Consider Mid-America Apartment Communities, a Memphis, Tenn.–based REIT with 46,650 units nationally. When company founder George Cates took the company public 17 years ago, he added Eric Bolton and Simon Wadsworth to his executive team.
“There was no understanding that I would do anything other than work on operational matters. George was not contemplating retirement,” says now-CEO Bolton. “As I worked in the company culture, though, I found that I liked [operations] a lot. It evolved, and somewhere along the way, two years before George retired, he moved me into the president’s role, and it became obvious that’s where things were headed.”
Bolton has been in the top spot since 2001 and Wadsworth stayed on as CFO until his retirement in 2009. Now 54, Bolton is working on putting his own transition plan in place.
Mid-America’s template is one that others should heed, says CEL’s Lee. He says proper succession plans should take no less than two years and up to five years to execute. And obviously, the older the leader, the more important it is to think about grooming replacements as soon as possible.
“There are companies that are planning successions though their leaders won’t retire anytime soon,” Lee says. “They’re doing all of the right things to prepare for any [eventuality]. These companies won’t miss a beat.”
