A notable shift is happening in America’s boardrooms. Recent data and headline transitions point to a common reality: boards are moving faster, evaluating broader candidate pools, and sending powerful signals to internal leadership pipelines.¹

CEO succession announcements among S&P 500 companies rose in 2025, driving a projected annual succession rate of 13% as of October — up from 10% in 2024.² Over the same period, external CEO hires increased from 18% to 33%, pushing internal promotions below 70% for the first time in eight years.³

Meanwhile, CFO-to-CEO promotions reached a decade high. In 2025, 10.26% of sitting CEOs at Fortune 500 and S&P 500 firms came directly from the finance chief seat, and all of those CFO-to-CEO moves were internal.⁴ These are not just data points; they are indicators of how boards are rethinking leadership, recalibrating risk, developing (or failing to develop) successors, and how leadership talent interprets opportunity inside the enterprise.

The Headlines: Four Successions, Four Different Stories

Disney: Internal Succession With Deliberate Design

After years of speculation and one spectacular failure (Bob Chapek’s brief, turbulent tenure from 2020 to 2022), Disney’s board unanimously chose parks division head Josh D’Amaro to succeed Bob Iger as CEO effective March 18, 2026. Critically, they also elevated the runner-up candidate, Dana Walden, to the newly created role of President and Chief Creative Officer.⁵ D’Amaro is a long-tenured Disney executive, and the structure of the announcement reflects a dual objective: appoint the next CEO and reduce the risk of losing a finalist.

AIG: External Succession After Late-Stage Disruption

AIG appointed Eric Andersen to join as president and CEO-elect effective Feb. 16, 2026, following the withdrawal of the company’s earlier choice, John Neal, amid a conduct-related investigation tied to his prior role.⁶ AIG pivoted quickly, landing Andersen, a 30-year Aon veteran who, as President, helped grow that firm’s market value from $35 billion to $85 billion.⁷ This is an external hire born of contingency, not preference.

Workday: Co-Founder Returns Amid Restructuring

In early February 2026, Workday announced a CEO transition with co-founder Aneel Bhusri returning to lead the company’s next chapter.⁸ This echoes the pattern seen at Starbucks with Howard Schultz and at Disney with Iger himself: when a succession fails, the founder comes back. The “founder returns” narrative may generate positive headlines, but it is a tacit admission that the original succession process did not work.

Constellation Brands: The Textbook Board-to-CEO Pipeline

Constellation Brands named Nicholas Fink as CEO effective April 13, 2026. Reporting noted that Fink had served on the board for several years while simultaneously leading another public company as CEO, reflecting a growing pattern: boards using director seats as extended evaluation windows for future chief executive candidates.⁹

What the Research Says About Internal vs. External Hires

The debate over internal versus external CEO hires is one of the most studied questions in corporate governance. The data is clear, though the implications are nuanced.

Internal hires outperform, on average. Research has linked internal succession to stronger operating performance in reasonably healthy companies and fewer early-tenure disruptions.¹⁰ Additionally, external hires receive lower performance evaluations for their first two years, are paid approximately 15% more, and have higher exit rates than internal promotions.¹¹

External hires carry significantly higher failure risk. Research indicates that externally hired CEOs are 84% more likely to be replaced within their first three years than those promoted from within, usually for poor performance.¹² Separately, roughly 40% of externally hired executives fail within 18 months.¹³

External hires can be strategically rational in transformation contexts. Struggling companies are more likely to hire an external CEO, and for good reason. External candidates bring new perspectives, are unencumbered by internal politics, and can catalyze transformation in ways that insiders, who may be wedded to existing strategy, cannot.¹⁴ When AIG needed a turnaround after its 2008 bailout, it was Peter Zaffino, brought in from Marsh, who delivered five consecutive years of underwriting profitability and a 92% stock gain.¹⁵

The cost differential is significant. On average, externally hired CEOs were paid 33% more than internal CEOs in 2023 across S&P 500 and Russell 3000.¹⁶ AIG’s incoming external CEO, Eric Andersen, has an initial target compensation of $14 million, rising to $18 million upon assuming the full CEO role.¹⁷

The trend is shifting toward more external hires at the top. While internal promotions still dominate, the share of external CEO hires in the S&P 500 nearly doubled in 2025.¹⁸ Boards are increasingly seeking leaders who can navigate disruption and accelerate transformation, prioritizing strategic renewal over institutional continuity.

What CEO Selection Signals to Leadership Talent

CEO appointments communicate opportunity structures across the organization, regardless of board intent.

Signals to near-term CEO candidates:

Internal promotion validates the pipeline. Disney’s promotion of D’Amaro tells every senior leader at that company, “if you perform, there is a path to the top.” The CFO-to-CEO trend reinforces this. As Kristy Honiotes of Crist Kolder Associates noted, the CFO seat “is no longer viewed as a ceiling.”¹⁹ High performers who see a credible internal path stay longer and invest more deeply.

External hiring can increase flight risk. The candidates who were passed over now face a choice: wait for another opportunity that may never come, or take their talents elsewhere. Disney mitigated this brilliantly by creating a new president and CCO role for runner-up Dana Walden. Most companies are not this thoughtful. Research from Russell Reynolds Associates found a direct link between increased succession planning and higher rates of internal appointments, suggesting that organizations that invest in their pipelines are less likely to need external candidates in the first place.²⁰

Signals to mid-level high performers:

They are watching. When a company repeatedly hires externally for senior roles, mid-level talent draws a rational conclusion: development here has a ceiling. Why invest years building institutional knowledge if the top jobs go to outsiders? Internal candidates bring deep firm-specific knowledge that external hires lack, yet companies often display an irrational bias toward external candidates about whom they know less.²¹

Conversely, when high performers see colleagues rise through the ranks, it creates a retention flywheel. Employees stay two times longer at companies with high internal mobility.²² The signal matters as much as the substance.

Signals to the broader workforce:

The “founder returns” narrative is a cautionary tale. When Workday’s co-founder has to come back, or when Disney’s Iger had to return from retirement, it broadcasts a message: we did not develop anyone who could do this job. That is demoralizing for every leader in the organization who thought they were being groomed for greater responsibility.

What This Reveals About Succession Planning

The key lesson from 2025 and early 2026 is not whether internal or external is “better.” It is that most organizations are not prepared for either scenario.

AIG’s story is the cautionary tale. Even with what they described as a “multi-year succession planning process,”²³ AIG’s first-choice external candidate collapsed weeks before starting. The only reason AIG avoided a crisis was that they had a deep enough candidate assessment to pivot quickly.

Disney’s story is the aspiration. They did not just pick a CEO. They designed a leadership architecture that retained both top candidates, built in transition time, and kept the departing CEO in an advisory role. That required years of assessment, development, and deliberate organizational design.

The common thread? The organizations that navigated succession well were those that had objectively assessed leadership readiness across their bench long before the transition was announced. The ones that stumbled were those that relied on a single candidate, informal evaluation, or assumed that past performance in one role guaranteed success in the next. The Conference Board’s data makes this urgent: with CEO succession rates at a 13% annual clip and external hires at an eight-year high, boards are moving faster and looking wider than ever before.²⁴ Without a rigorous, evidence-based view of readiness, bench depth, and targeted development priorities, succession planning becomes reactive rather than strategic.

Building Leadership Depth Before It Becomes Urgent

Succession planning is strongest when it functions as an operating system: ongoing assessment, disciplined development, and measurable readiness — not a last-minute search for a single “heir apparent.”

SIGMA’s Leadership Skills Profile – Revised® (LSP-R®) provides boards, CEOs, and HR leaders with an objective, scientifically validated assessment of leadership readiness across the entire senior bench, not just the heir apparent. The LSP-R measures the competencies that differentiate effective senior leaders, providing a clear picture of:

• Who is ready now to step into critical roles
• Who is progressing and what targeted development investments will accelerate their readiness
• Where the gaps are that need to be filled, whether through development or strategic external hiring

For organizations facing accelerated CEO turnover and a more competitive external market, the goal is simple: expand the set of credible successors well before unexpected changes happen — and they will.

Ready to stop guessing and start measuring?

Clarify who is ready now, where gaps exist, and which development moves will strengthen the leadership bench. Complete the form below and a member of our team will be in touch shortly.

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