For most of the modern corporate era, CEO succession followed a familiar pattern. Boards identified a short list of internal executives, evaluated them over time, and ultimately selected the next leader. Occasionally, a disruptive external hire would break the mold. Board service, however, was rarely treated as a meaningful feeder into the CEO role. That is changing.

New data from global executive search firm Spencer Stuart reveals that 19 of the 168 new S&P 1500 CEOs were drawn from their own company’s boards, the most since 2020.¹ At the same time, CEO departures in the S&P 500 reached a projected annual rate of 13% in 2025.² Boards are not functioning only as oversight bodies. Increasingly, they are part of the succession bench.

For CEOs and senior leaders, the implication is straightforward: leadership continuity planning is no longer limited to the executive team. Boards are widening the pool, and organizations that do not adapt risk being unprepared when turnover accelerates.

The Board-to-CEO Pipeline Is No Longer an Emergency Measure

Historically, board directors stepped into the CEO role as an interim solution following a scandal, a health crisis, or a sudden resignation. Fortune’s reporting notes that Spencer Stuart has traditionally classified directors as outsiders because they are not responsible for day-to-day operations.³ But a growing number of appointments suggest that boards are reconsidering this classification.

Recent examples are instructive:

• Verizon appointed Dan Schulman as CEO in October 2025 after he served on the board since 2018 and as lead independent director beginning in December 2024.⁴
• SAIC appointed James (Jim) Reagan as permanent CEO on Feb. 17, 2026, after he joined the board in January 2023 and served as interim CEO starting in October 2025.⁵
• Constellation Brands named Nicholas Fink as its next CEO effective April 13, 2026, after he served on the board since 2021.⁶
• Match Group appointed Spencer Rascoff as CEO effective Feb. 4, 2025, about a year after he joined the board.⁷

These are not emergency appointments. They are the product of deliberate cultivation — boards that treated director seats as extended, high-visibility evaluations for enterprise leadership.

Why This Is Happening Now

Several forces are converging:

CEO turnover is accelerating

In the S&P 500, CEO succession announcements increased in 2025, driving the projected annual rate to 13% as of October, up from 10% in 2024.⁸ In the broader S&P 1500, 168 new CEOs were appointed — the highest count in fifteen years.⁹ Boards are acting more frequently, and they need viable candidates quickly.

External hires carry growing risk

External CEO appointments in the S&P 500 rose from 18% in 2024 to 33% in 2025.¹⁰ External leaders can bring fresh perspective, but transitions are expensive and outcomes are uneven. Harvard Business Review has reported that poorly managed CEO transitions can destroy close to $1 trillion in market value annually among S&P 1500 companies.¹¹ Starbucks’ experience is instructive: the company has cycled through five CEO successors to its founder, with the most recent external hire commanding approximately $96 million in first-year compensation.¹² Boards are understandably seeking alternatives that combine external perspective with institutional knowledge.

Board composition has shifted toward operators

Boards are populated differently than they were a generation ago. Among new S&P 500 directors appointed in recent years, 30% are active or recently retired CEOs.¹³ That means boards now contain sitting executives with significant operating experience — leaders who have run organizations, navigated crises, and built strategic frameworks. Many directors today are not only advisors; they are proven operators.

The “Insider-Outsider” Advantage

Governance advisors often describe director CEO candidates as having an “insider-outsider” advantage: directors understand the company’s strategy, risk profile, and competitive position, but are not entrenched in internal politics or a single operating silo.¹⁴

This balance is difficult to replicate. Traditional internal candidates — COOs, divisional presidents, CFOs — bring deep operational fluency but may carry the weight of association with a strategy the board wants to evolve. External candidates bring a blank slate but face a steep learning curve. Directors offer a middle path: governance-level fluency combined with the ability to reset priorities without discarding the broader institutional plan. Verizon’s appointment of Schulman illustrates this well. As a board member since 2018 and lead independent director since late 2024, Schulman had years of visibility into Verizon’s strategy and challenges. Verizon’s announcement notes that Schulman led PayPal’s transformation, including tripling revenue from $8 billion to $30 billion, while adding hundreds of millions of customers globally.¹⁵ Boards may view that track record as a “ready-made” transformation playbook paired with sustained familiarity with the company through board service.

What This Means for CEOs and Boards

This shift changes the practical work of succession planning in three ways:

1. The succession aperture must widen

Many succession plans focus on a narrow set of internal executives, often limited to the CEO’s direct reports. If directors are increasingly viable CEO candidates, the relevant talent pool is broader than many organizations acknowledge. Global executive search and leadership advisory firm Russell Reynolds Associates reports that only 50% of directors surveyed said their board could appoint an internal successor if one were needed immediately.¹⁶ That is not readiness; it is a coverage gap.

2. Assessment should be continuous and structured

Organizations that elevate directors to CEO tend to have prolonged exposure to those candidates — not only through quarterly meetings, but through strategy decisions, risk discussions, and inflection points.

Informal observation helps, but it is not a substitute for structured evaluation when the stakes are this high. Global organizational consulting firm Korn Ferry’s research reports that fewer than 40% of boards discuss succession planning quarterly or more often.¹⁷ Russell Reynolds also reports that longer, more structured succession timelines are associated with directors feeling better informed about internal candidates.¹⁸

3. Precision matters: know what is needed, what is present, and what closes the gap

Many organizations do not fail on intent; they fail on specificity. The key question is rarely whether a plan exists. It is whether decision-makers can clearly articulate:

• The leadership requirements of the next CEO role
• The leadership capabilities currently on the bench (including governance roles)
• The development and selection actions required to close gaps

That requires a structured, validated leadership framework applied consistently across candidate pools — C-suite executives, board directors, and high-potential cohorts.

Tools such as SIGMA’s Leadership Skills Profile — Revised® (LSP-R®) are designed for that purpose. The LSP-R measures 50 leadership competencies across cognitive, interpersonal, personal, and senior leadership dimensions, and is completed in about 25 minutes.¹⁹ When used with the SIGMA Success Profile™ framework, the LSP-R supports three outcomes many succession plans lack:

• Define role requirements. A SIGMA Success Profile™ clarifies the competencies, experiences, and leadership characteristics required for the role now and in the future, reducing the tendency to select successors who simply resemble the current incumbent.
• Evaluate the bench consistently. A validated assessment provides a shared measurement language that supports comparisons across candidate pools, including directors with prior CEO experience.
• Build targeted development plans. Assessment without development is diagnosis without treatment. The LSP-R Focus Report is an interpretive report that summarizes results across the 50 competencies, flags role-relevant strengths and risks, and identifies a short list of development priorities. It helps organizations design plans that close specific gaps and improve readiness on a defined timeline. Korn Ferry’s research notes that many potential successors require 12 to 24 months of targeted development before assuming the top role with reduced risk.²⁰

The Competitive Landscape for CEOs Has Changed

For aspiring CEOs and sitting C-suite executives, the message from this data is clear: competition is no longer limited to internal peers. Directors may bring prior CEO experience, investor credibility, and the ability to signal strategic change without inheriting the perceived baggage of current operating decisions.

Spencer Stuart’s 2025 CEO transitions research notes:

• COOs and presidents accounted for 48% of new CEO appointments in 2025, up from 40% the prior year.²¹
• 84% of new S&P 1500 CEOs were first-time enterprise leaders.²²
• Average CEO tenure declined to 8.5 years, and nearly 40% of S&P 1500 CEOs now leave within their first five years.²³

Timelines are compressing and scrutiny is intensifying. Organizations that perform best in this environment are those with a clear, evidence-based understanding of the leadership bench — not a binder of bios and an annual calendar reminder.

The Bottom Line

The boardroom-to-CEO pipeline is unlikely to reverse. As boards fill seats with experienced operators and CEO turnover remains elevated, the line between governance and executive leadership will continue to blur. Boards are building optionality into their succession strategy. Organizations that do not do the same risk being caught without a credible successor when the moment arrives.

The organizations that handle this well, such as SAIC, Verizon, and Murphy USA, share a common discipline. They know the talent they need. They know the talent they have. And they have a structured, evidence-based process for closing the gap. That discipline does not happen by accident. It happens by design.

Build a Stronger Succession Pipeline

If this article raised questions about leadership bench strength, SIGMA’s Leadership Skills Profile — Revised (LSP-R) and Succession Planning Sprint can help translate uncertainty into a concrete, assessment-backed roadmap. Complete the form below and a member of our team will be in touch shortly to discuss your organization’s unique needs.

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