TD Bank Exemplifies Best Practices in CEO Succession Planning
The departure of a Chief Executive Officer (CEO) can have a significant impact on an organization’s performance, especially when a succession plan is not in place. Unplanned successions can result in substantial financial losses, with organizations ceding an average of $1.8 billion in shareholder value compared to those with prearranged plans.1 In total, the S&P 1500 forfeits close to $1 trillion in market value annually due to poorly managed CEO and C-suite transitions.2
Organizations without a strong succession plan also risk prolonged periods of uncertainty, which can negatively affect employee morale, productivity, and stakeholder relations. In contrast, organizations that prioritize CEO succession planning are better equipped to maintain stability, minimize disruptions, and foster confidence during leadership transitions.
TD Bank Group’s recent announcement of President and CEO Bharat Masrani’s retirement — scheduled for April 2025 — provides a strong example of how strategic succession planning can mitigate these risks. By naming Raymond Chun, current Group Head of Canadian Personal Banking, as Masrani’s successor well in advance, TD Bank is demonstrating best practices in CEO succession and ensuring a smooth leadership transition. In this blog, we’ll explore TD Bank’s recent CEO succession announcement, examine their approach to leadership transitions, and highlight key best practices for proactive succession planning — including internal talent development, transparent communication, and structured knowledge transfer.
A Seamless Transition: TD’s Approach to Succession Planning
TD Bank’s approach to CEO succession aligns with best practices in the industry. By announcing Masrani’s retirement more than six months in advance, the bank ensures continuity and stability. This strategic foresight helps avoid organizational disruptions associated with unplanned leadership transitions. As SIGMA’s succession planning experts emphasize, effective succession planning is proactive and ongoing. TD’s proactive planning, paired with the well-timed retirement announcement, demonstrates the company’s commitment to succession planning aligned with industry best practices. These best practices include fostering leadership continuity through internal talent development, clearly outlining the transition plan, and providing the successor with formal opportunities for knowledge transfer by working alongside the current CEO for more than six months before the April 2025 transition.
Leadership Continuity Through Internal Development
One of the key elements of successful CEO succession planning is cultivating leaders from within the organization. Raymond Chun, a 32-year veteran of TD, embodies this principle. Having risen through the ranks since joining TD’s management training program in 1992, Chun’s deep institutional knowledge and proven leadership make him an ideal candidate. SIGMA’s succession planning framework stresses the importance of identifying potential successors early and providing them with opportunities for growth, preparing them for the top role. TD Bank’s decision to promote from within ensures a smooth transition while preserving its culture and values.
Stakeholder Engagement and Communication
Effective communication is another cornerstone of successful succession planning. TD Bank’s clear announcement of its leadership transition sends a strong signal to employees, investors, and stakeholders. Involving all relevant parties in the process helps mitigate uncertainty and fosters confidence in the organization’s future direction. As SIGMA’s experts highlight, a transparent approach to succession planning ensures alignment between stakeholders and minimizes the risk of disruption. TD Bank’s thorough communication strategy is an exemplary model for others to follow.
On-the-Job Training and Knowledge Transfer
To facilitate a seamless transition, TD has appointed Chun as Chief Operating Officer (COO) effective November 1, 2024, giving him responsibility for all lines of business. This preparatory period allows Chun to work closely with Masrani and gain hands-on experience as COO before officially assuming the CEO role. SIGMA’s Succession Transition service emphasizes the value of on-the-job training and structured knowledge transfer to ensure successors are fully prepared for their new roles. TD Bank’s plan to have Chun transition to CEO at the Annual Meeting in April 2025 demonstrates a methodical, phased approach to leadership transitions that minimizes risk.
The Benefits of Proactive Succession Planning
TD Bank’s commitment to strong succession planning offers multiple advantages, not only for the bank but also for its stakeholders. A proactive approach, as demonstrated by TD, reduces the risk of business disruptions, maintains employee morale during transition, and enhances investor confidence. In fact, the price of TD Bank shares increased by 2.7% the day after the announcement, reflecting the market’s positive response to the bank’s well-planned leadership transition. By preparing the CEO successor well in advance and keeping stakeholders informed, TD ensures stability and continuity at a critical time.
A Best-Practice Example for CEO Succession
TD Bank’s careful planning and execution of its CEO transition process showcases best practices in CEO succession planning. The bank’s proactive approach — developing internal talent, maintaining transparency, and facilitating structured knowledge transfer — sets a benchmark for others to follow. As SIGMA’s experts attest, well-structured CEO succession plans are essential to safeguarding an organization’s future success, and TD has demonstrated its commitment to ensuring a smooth transition at the highest level. By implementing these proven succession planning strategies, TD is poised for continued success under the leadership of Raymond Chun, ensuring long-term stability and growth for the bank and its stakeholders.
Committed to Ensuring a Seamless CEO Transition?
Whether you need to execute a smooth leadership handover or quickly develop a comprehensive succession plan, SIGMA can help. Our Succession Planning Transition service ensures that critical knowledge is preserved and leadership continuity is maintained as you transition from incumbent to successor. For organizations with a sense of urgency, our Succession Planning Launch is designed to help you complete six months of succession planning work in just two half-day workshops. By the end, you’ll have a customized 12-month succession plan for your CEO and every key leader in your organization. Ready to get started? Share your needs with us by completing the form below and one of our experts will contact you shortly to discuss how we can help you achieve your goals.
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1 Favaro, K., Karlsson, P., & Neilson, G. L. (2015). The $112 billion CEO succession problem. Strategy+Business. https://www.strategy-business.com/article/00327
2 Ciampa, D. (2024). Power, influence, and CEO succession. Harvard Business Review. https://hbr.org/2024/07/power-influence-and-ceo-succession