In 2021, FW Cook sought to better understand how companies can effectively retain their C-suite leaders after CEO turnover. Ensuring stability across the leadership team is an important factor in executing proper CEO succession, particularly as it applies to high-value individuals that may have been considered as CEO candidates themselves. Our prior study found that special one-time equity grants made to the leadership team have a strong retention effect in the short term, but that the effect wanes quickly

This year, FW Cook refreshed the study with new data to test for changes in the prevalence or effectiveness of special equity grants as a retention strategy. While the original study focused on CEO turnover events between 2011 and 2015 (and an associated retention period through 2020), this year’s analysis focused on the following five-year window. Further, our updated analysis builds upon the original research by also exploring the retentive value of all outstanding equity awards (i.e., annual and special grants) held by C-suite leaders.

The findings in our updated study are largely aligned with those of the original analysis. Particularly, special equity grants made to non-CEO executives in the wake of CEO turnover continue to show a strong, but limited, retentive effect – typically lasting approximately two to three years. Prevalence and design of such awards remain consistent, although the dollar value of such awards has increased materially.

A new finding identified in this year’s study is that non-CEO executive grants are twice as common when the CEO is an external hire. Lastly, a correlation between total outstanding equity and length of retention was identified, regardless of whether special retention grants were made.

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