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13.4: Senior Management Character, Compensation, Composition, Tenure, Turnover, and Succession

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    Senior Management Character, Compensation, Composition, Tenure, Turnover, and Succession

    • Cult of a CEO (leader) personality or the high media profile of CEO
    • Over-reliance on, excessive power of, or domination by the CEO, including unwillingness to delegate
    • Heavy dependence on the CEO for corporate public, client, and government relations (e.g., when the CEO is the sole or main spokesperson)
    • Weak or “domineered” senior management team below the CEO
    • CEO incentive and/or total compensation materially higher than peer average
    • Link between company financial performance and executive compensation primarily focused on short-term horizon
    • Special payments or unusual fringe benefits or loans to executives without a clear purpose, or unconnected with any increase in performance (including “guaranteed” bonuses)
    • Compensation plans or provisions that create perverse incentives (i.e., payouts that encourage excessive acquisition activity; payouts on reaching a certain share price trading level).
    • Unclear succession plan and/or failure to name a successor
    • High or unexpected senior management or board of director turnover or departures.
    • Lack of credibility in company explanation of senior departure(s)
    • Lavish CEO and senior executive lifestyle and corporate entertainment