Losing the CEO race comes with a multi-million dollar consolation prize

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Good morning. In a closely contested race for chief executive, the runner-up doesn’t necessarily leave empty-handed. Recent high-profile CEO selections have often led to substantial pay packages for the executives who were not chosen.

For instance, when appointed Josh D’Amaro this month to take over from Bob Iger as CEO, the entertainment behemoth awarded , a , in addition to an annual target compensation of roughly $27 million. Similarly, after designated Ted Pick as its new CEO in 2023, it granted special bonuses to Pick as well as to the reported co-runners-up, Andy Saperstein and Dan Simkowitz. 

These significant sums highlight the high value of keeping top talent. An executive who reaches the final stage of a CEO search is typically a high achiever with extensive company knowledge and strong internal and external networks. Losing such a key figure can disrupt operations, damage team spirit, and negatively impact profits. The cost of replacing a senior executive is usually many times their yearly salary.

Compensating executives to secure their loyalty is effective, but only to a point. A study determined that these grants offer “a strong, but limited, retentive effect—usually persisting for about two to three years.” According to Marco Pizzitola, a consultant at FW Cook and coauthor of its recent report, this duration probably corresponds to the awards’ vesting periods. 

The FW Cook report analyzed 100 major U.S. companies and found 47 that changed CEOs between 2016 and 2020. Boards at about one-third of these companies issued succession-related retention awards to 39 senior executives who were not appointed CEO. 

Firms were more than twice as inclined to distribute these grants when they recruited a CEO from outside, indicating “greater concern” about a potential departure of executives under an external hire compared to an internal promotion, Pizzitola notes.

Further details on this trend—including the additional component of the consolation package provided to Walden—are available . 

Contact CEO Daily through Diane Brady at