53% of France's CAC40 have Deputy CEOs; UK's FTSE100 has none

Aug 31, 2017 | Business Review Europe

Over half of France’s biggest businesses have a Deputy Chief Executive Officer on their boards, while 4% of Dutch companies, 3% of German, and zero UK organisations have the same.

Not having a Deputy CEO puts firms at serious risk if the CEO steps down unexpectedly, according to DHR International. No company in the UK’s FTSE100 has a Deputy CEO, yet there were three in 2016 and six three years ago.

DHR International states that having a Deputy CEO gives support to a company as a whole, adding an additional pool of experience to help advise on strategic moves or when looking for opportunities for growth. Sometimes an interim CEO is required due to unforeseen circumstances, and this is a far simpler process when a Deputy is in place. Otherwise, the temporary replacement may be underqualified or external without a strong knowledge of the business, and this wastes valuable time.

Frank Smeekes, Managing Partner, Europe at DHR International, said of this issue: “Instability caused by a CEO unexpectedly stepping down could cause damage to a company’s profits and share price.

“Whether the Deputy CEO is in place as part of a succession plan for the CEO, acting as an interim placement, or helping a new CEO find their feet – the role can be a vital tool to avoid any potential disruption to the smooth running of the board.

“A Deputy CEO can offer continuity for stakeholders including shareholders. Having a robust and sustainable CEO succession plan is one of the most important functions a board’s nomination committee can perform.

“In addition, as a part of their role the Deputy CEO can work to ensure that the current CEO is pulling their weight. The Deputy CEO stands as a constant reminder that the Board does not necessarily consider the CEO to be indispensable – which should motivate them to deliver shareholder value on a consistent basis.

“CEOs are under greater pressure and scrutiny than ever before – in large part due to the rate of change in business and the influence of social media. Deputy CEOs can also help their CEO to respond quickly – or even act pre-emptively in order to minimise the impact of any threats.”

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