Joann Lublin of the Wall Street Journal reports today on directors' beliefs about the CEO talent pool. She writes:
The pool of executives qualified to take over the top job at the biggest U.S. companies is incredibly shallow, especially in the technology industry, a recent survey of directors finds. On average, directors of Fortune 250 companies estimate that fewer than four people inside and outside their company have the management expertise and industry-specific knowledge to step into the CEO role and run it as well as its current leader, according to a Stanford University survey of 113 such directors. Board members also say an average of six executives could perform at the same level as the head of their largest rival.
I found these results interesting. It certainly explains why CEOs receive very high compensation packages. The question, however, is whether directors are right. Apparently, the conventional wisdom is that the talent pool is very shallow. Do directors have concrete evidence to support this belief? What if they are wrong? What would that mean for corporate leadership, governance, and compensation? I haven't seen any concrete, valid research that supports the conventional wisdom here. I'm not saying they are absolutely wrong; I would just like to see proof.