The Golden Eagle Health Diagnostics, Inc. “Executive Brief: CEO Succession and Selection Plan”
You will draft a document in the form of an “Executive Brief: CEO Succession and Selection Plan”, in MLA format, minimum five pages, due via Turnitin by 11:59 p.m. Thursday, May 19 based on the hypothetical scenario described below.
You have just settled in to your first meeting as an independent director on the Board of Directors of a five-year old California corporation – Golden Eagle Health Diagnostics, Inc. (“Golden Eagle”) – that manufactures health care diagnostic equipment.
Notwithstanding its youth, Golden Eagle has quickly risen in its sector and has several promising, high-tech diagnostic innovations in the pipeline.
Golden Eagle is not (yet) publicly traded.
Its capital structure is a function of a shareholder base of just under one hundred shareholders, a few of whom are Silicon Valley health sciences investors who collectively control about 40% of outstanding shares.
The company owns several patents to highly innovative diagnostic products under development that a number of Wall Street analysts have suggested could provide tremendous returns in the future.
The company is not highly leveraged, so it can still incur more debt, if deemed appropriate.
The Board has had some discussions about “going public,” i.e., having an initial public offering in perhaps five years.
Since its inception, Golden Eagle has been led by its founder and CEO.
To her credit, the CEO has guided the shareholders toward the election of a relatively independent board that highly respects the CEO without being her “puppets.”
The Chairman of the Board begins the meeting with the following startling announcement:
“As you know, we’ve talked on this board about the need to develop a CEO succession plan. I’ve stated in the past my belief that the transition from one CEO to another is a critical moment in a company’s history. A smooth transition is essential to maintain the confidence of investors, business partners, customers and employees, and provides the incoming CEO with a solid platform from which to move the company forward. A properly designed and executed succession plan is at the center of any successful transition. As you also all know we have yet to develop such a plan. Well, the time to do so has arrived.
I have the sad duty to report that our CEO has just informed me of her decision to resign from the company for health reasons – her last day is in six months. Somehow we need to formulate a succession plan, with limited assistance from our CEO, identify what kind of qualities we should be looking for in a new CEO, and do our best to find and select our next CEO within the next six months.”
After much discussion, the board voted to task the Chair and yourself with the following responsibility:
Draft a five-page Executive Brief outlining a new “CEO Succession and Selection Plan” for your company.
During the discussion, the Chair whispered into your ear that she expects you to come up with an initial 5-page Executive Brief for her review, in MLA format, by 11:59 p.m. Thursday, May 19 (via Prof. Cardenas, of course).
In tackling your task consider the following:
Assume your company has no existing succession and selection plan, but that it does have fairly recent strategic plan.
What should be the key components of the new CEO Succession and Selection Plan and what should your company be aware of as it designs and executes the plan?
Include in your Executive Brief your own suggestions concerning the specific qualities that you believe Golden Eagle should look for in potential CEO candidates.
Also include some discussion of how the board might go about ranking its candidates and identifying finalists among candidates.
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