Brokerage Leadership Changes: Legal Checklist for Smooth CEO Transitions

Hook: CEO transitions create legal risk — here's the checklist brokerages must run through

When a founder or long-tenured CEO steps down, operations, licenses and client trust all change overnight. That uncertainty is the pain point: a missed filing, an incomplete employment agreement or an improperly executed equity transfer can trigger licensing penalties, tax surprises, or litigation. The January 2026 leadership move at Century 21 New Millennium — where Kim Harris Campbell assumed immediate CEO duties while founder Todd Hetherington moved to a newly created board chair role — illustrates how a high-profile brokerage can change leadership quickly while keeping governance intact. Use this step-by-step legal checklist to make your next CEO transition smooth, compliant and defensible.

The 2026 context: why transitions are riskier — and more strategic — than ever

Late 2025 and early 2026 brought several trends that affect how brokerages handle CEO transitions:

• Consolidation and private equity activity: M&A and partner investments accelerated in real estate and professional services, increasing the frequency of change-in-control events and contractual change-of-control triggers.
• State-level limits on restrictive covenants: More states have tightened noncompete enforceability, impacting executive agreements and post-exit protections.
• Stronger licensing enforcement: State regulatory bodies are auditing license holder records more closely — including practicing brokers and qualifying broker updates for brokerages.
• Data, privacy and tech handoffs: With greater reliance on CRM systems and AI-driven lead platforms, leadership transitions require careful IP and data-access planning to avoid privacy breaches or loss of institutional knowledge.
• Higher scrutiny on executive pay: Investors and boards expect transparent executive compensation structures, especially for firms that received outside capital or scaled fast in 2024–2025.

Overview: A legal roadmap tied to the Century 21 New Millennium playbook

Century 21 New Millennium’s move provides a model: immediate CEO appointment, a new governance layer with a chair and board, and continuity through founder involvement. Translate that into practical legal steps: plan, document, notify, implement and monitor. Below is a sequenced checklist you can use for brokerages and other service firms.

Step 1 — Pre-transition planning (30–90 days before announcement)

Start early. Even when a transition looks imminent, many firms rush and create compliance gaps. Pre-transition planning is the time to align stakeholders, evaluate contractual risks and set timelines.

1. Assemble the transition team
   • General counsel or external corporate attorney
   • Head of HR
   • Chief financial officer
   • Compliance officer / licensing manager
   • Board chair or lead director
2. Review governing documents
   • Bylaws, operating agreement, shareholder or LLC agreements — look for CEO/President appointment mechanics, board composition rules and any change-in-control provisions.
   • Investor rights agreements, voting agreements and registration rights that may affect board appointments or equity transfers.
3. Map regulatory touchpoints
   • State real estate commission requirements (qualifying broker designation, notice requirements).
   • Local business licensing, if applicable.
   • Professional licensing for key executives.
4. Identify contract triggers — vendor agreements, lease agreements, client contracts and financing documents frequently have assignment or change-of-control clauses. Flag those requiring prior notice or consent.

Step 2 — Employment agreements and transition roles

When the CEO role changes, employment agreements must be precise. Use the transition to align incentives and reduce future disputes.

Key clauses to draft or update

• Position and duties: Define title, reporting lines and scope during transition (e.g., CEO vs. Chairman responsibilities).
• Term and termination: Time-limited notice, cause vs. without-cause termination, and post-termination obligations.
• Severance and change-in-control provisions: Calculate severance multiples and whether a termination within X months of a control event triggers enhanced pay.
• Equity vesting: Address accelerated vesting on termination or change of control. Include performance-based vesting where applicable.
• Restrictive covenants: Tailor noncompete, nonsolicit and non-disclosure clauses to the jurisdictions where the executive will operate (note 2026 trend: many states now limit or ban noncompetes).
• Transition/consulting covenant: If founder moves to chairman, draft a consulting or board services agreement to define scope, term and compensation for the new role.

Practical tip: For brokerages operating in multiple states, adopt a jurisdiction-specific approach to restrictive covenants. Consider a hybrid protective strategy using trade secret protection, nonsolicit language and client assignment provisions where noncompetes are unenforceable.

Step 3 — Equity transfers, valuations and securities compliance

Equity changes often create the most friction. Whether shares move from founder to new board-controlled holding entities or the firm issues new equity to the incoming CEO, these moves must be carefully executed.

Checklist for equity transactions

1. Agree economic terms and structure: Determine sale, gift, grant, option grant, or reorganization. In the Century 21 example, co-owners retained involvement via board seats — consider similar minority protections.
2. Valuation and tax planning: Obtain an independent valuation for meaningful transfers to support tax positions and investor reporting. Consider timing for Section 83(b) elections when equity is subject to vesting.
3. Securities law compliance: For private firms, confirm an exemption (e.g., Rule 701 for compensatory plans, Regulation D) before offering equity to executives. Prepare investor notices and subscription agreements.
4. Corporate approvals: Board resolutions approving issuance or transfer, and shareholder consent if required under the governing documents.
5. Transfer mechanics: Stock powers, share certificates, ledger update, and necessary filings with the company’s transfer agent if used. For LLCs, update membership ledger and capital accounts.
6. Update capitalization table and investor notice: Shareholders often require notice of transfers; provide required disclosures and rights of first refusal if in contract.

Step 4 — Board governance updates and corporate minutes

Board structure changes must be documented methodically — this is where transitions become legally defensible.

Action items

• Board resolution templates: Prepare and approve resolutions appointing the new CEO, changing officer titles, and creating any new board positions (e.g., chairman).
• Amend bylaws or operating agreement if necessary: If adding a board layer or changing the number of directors, follow the amendment and notice procedures in your governing documents.
• Document minutes thoroughly: Record the rationale for leadership changes, voting outcomes, and any dissent to reduce future challenges. Corporate minutes are an evidentiary anchor in disputes.
• Board committee updates: Reassign committee memberships, update charters (audit, compensation, governance) and reflect changes in minutes and public filings where required.

Step 5 — Regulatory notifications and state licensing

Brokerages have unique regulatory obligations. Changing the CEO may trigger notification or designation requirements with state real estate commissions and other regulators.

Common regulatory steps

• Qualifying/Designated Broker update: In many states, a brokerage must have a designated or qualifying broker on file. Confirm whether the CEO change affects that designation and file updates promptly.
• Corporate registration and officers list: Update state business registrations (annual reports) and any filings that list corporate officers.
• Professional licenses: If the new CEO holds a real estate broker license, ensure their license is active and in good standing for the relevant jurisdictions.
• Regulatory consents: For brokerages with franchise agreements, membership in national brands (e.g., Century 21), or lender panels, confirm whether the franchisor or partners require notice of leadership changes.
• Notify insurers and bonding agencies: D&O insurance and fidelity bonds may have change-in-control notice requirements — coordinate with brokers and update policies if necessary.

Timing is critical: some state commissions expect notice within days of leadership change. Make a compliance calendar and assign owners.

Step 6 — Executive compensation and tax mechanics

Rework compensation with attention to current market norms and tax consequences.

• Pay mix: Balance salary, cash bonus, long-term equity and performance metrics. 2026 boards increasingly favor objective performance KPIs tied to retention and client satisfaction.
• Deferred compensation & ERISA issues: If offering deferred pay, consult ERISA counsel to avoid inadvertent plan formation and fiduciary obligations.
• Tax withholdings and payroll setup: For any severance or sign-on awards, plan payroll withholdings and tax reporting (W-2 vs. 1099 for consulting arrangements).
• Golden parachutes & excess parachute tax: For C-corporations, evaluate Section 280G risk for parachute payments in change-of-control situations.

Step 7 — Client, vendor and investor communications

A well-managed information flow minimizes market disruption and protects relationships.

• Public announcement: Coordinate timing with filings and board approvals. Include a leadership bio and the strategic rationale for change — Century 21 New Millennium stressed continuity through the founder’s new chair role to reassure stakeholders.
• Client notices: Where contracts name the CEO or refer to specific officers, send tailored notices or amendments to prevent misunderstanding.
• Vendor consents: Notify key vendors (CRM, MLS providers, franchisors) and obtain consents for any material assignment if contracts require.
• Investor relations: Provide investor briefings and documentation packages — board resolutions, employment agreements and capitalization updates.

Step 8 — Operational cutover and access control

Leadership changes often involve immediate access changes. Protect client data and systems.

• IT and security: Revoke or re-provision admin access, update single sign-on roles, and document access changes in a secure log.
• Data ownership and IP: Confirm ownership of client lists, CRM data, and proprietary models. Execute IP assignment agreements if necessary.
• Transition services: For a phased handoff, implement a written transition services agreement (TSA) that sets deliverables, timelines and confidentiality obligations.

Step 9 — Post-transition monitoring and dispute readiness

After the handoff, keep the governance hygiene up to date and anticipate disputes.

• Compliance audit: Within 60–120 days, run a compliance check on licensing, filings, compensation payments and minutes.
• Retention & morale: Monitor key producer retention (agents in a brokerage context) and be ready to address departures with clear client transfer rules.
• Dispute documentation: Preserve email chains and board materials. If litigation arises, a well-documented minute book and executed agreements materially reduce litigation exposure.

Practical templates and language (samples you can adapt)

Below are brief templates to accelerate drafting. Always customize to your jurisdiction and business facts.

Sample board resolution (short form)

"Resolved, that Kim Harris Campbell is hereby appointed Chief Executive Officer of [Company Name], effective [Date]; and further resolved that Todd Hetherington is appointed Chairman of the Board pursuant to the amended bylaws, and the officers are authorized to take all necessary actions to implement this resolution."

Sample employment clause — change-in-control severance

"If Executive's employment is terminated by the Company without Cause or by Executive for Good Reason within twelve (12) months following a Change in Control, Executive shall receive a severance payment equal to twelve (12) months' base salary plus the target bonus for the year of termination."

Red flags that require immediate legal attention

• Uncleared transfer of client lists or CRM exports without executed assignment agreements.
• Missing board approval for equity issuances or transfers.
• Failure to update qualifying broker or designated broker filings in states that require immediate notice.
• Inconsistent severance or consulting terms between departing founder and incoming executive that could lead to disputes with investors.
• Noncompliant securities offers to executives without proper exemptions or disclosures.

Case study takeaways from the Century 21 New Millennium move

Century 21 New Millennium’s leadership transition in early 2026 demonstrates several best practices you should emulate:

• Continuity through governance: Creating a chair role for the founder preserved institutional knowledge while enabling operational leadership transfer.
• Immediate appointment with clear communication: Prompt public announcement reduced rumor risk and reassured agents and partners.
• Board composition for strategic support: Adding experienced industry leaders to the board strengthens oversight and signals stability to stakeholders.

Advanced strategies for 2026 and beyond

As you plan transitions, consider these forward-looking tactics that reflect 2026 realities:

• Scenario-based succession contracts: Draft employment and succession clauses with pre-agreed triggers and paths for internal or external succession to reduce board friction.
• Data escrow for critical systems: For brokerages dependent on proprietary lead platforms, negotiate escrow or continuity clauses to preserve service levels post-transition.
• Compensation clawbacks and ESG-linked metrics: Tie executive pay to customer retention and compliance KPIs to align long-term interests during transitions.
• Flexible remote work clauses: With dispersed leadership, clarify jurisdictional employment laws and tax implications for executives working across states.

Checklist summary — Who does what and when

1. Day 0–7 (Immediate): Public announcement, board resolution, update officer lists, notify state regulators if required.
2. Day 8–30: Finalize employment agreement, equity documentation, update payroll and benefits, revoke/admin access.
3. Day 31–90: File any registration or licensing changes, run compliance audit, complete transition services work, finalize investor notifications.
4. Day 90–180: Post-transition review, monitor retention, close outstanding contractual consents, update corporate minute book.

Final considerations — risk transfer and defense

Transitions always involve residual risk. Reduce exposure by:

• Documenting every material decision in board minutes and resolutions.
• Maintaining a centralized governance binder and secure electronic records.
• Engaging counsel early to clear securities, tax and regulatory issues before execution.

Call to action

When your brokerage faces a leadership change, a checklist is only the start. Get experienced counsel to tailor employment agreements, equity transfer documents and regulatory filings to your structure and jurisdictions. If you want a ready-to-adapt transition packet — sample board resolutions, employment agreement templates and a regulatory notification timeline customized for multi-state brokerages — schedule a compliance consultation with our team or download our CEO Transition Pack for Brokerages. Protect the business and preserve value: prepare the legal foundation before you change the face of leadership.

Related Reading

• Winter Comfort on Two Wheels: Hot‑Water Bottles, Heated Grips, and Wearables for Cold Rides
• From Garage to Global: Case Study of Growing a Flag Patch Line Using DIY Principles
• Helmet-Compatible Headphones and Listening Safety for Cyclists
• Energy Surcharges 2.0: Modeling the Impact of Data Center Electricity Levies on Freight Contracts
• Is the Mac mini M4 the Best Value Mac Right Now? A Deals-Focused Deep Dive