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Study shows turnover of CEOs picked up pace

CEO turnover at the world’s largest 2,00 public companies returned to rates seen during pre-recession years, a study has found.

According to Booz & Company’s 12th annual CEO Succession Study, CEO turnover globally is now at 14.2%, up 2.6% from 2010, while in the UK, this figure is even higher at 14.7%.

Ashley Harshak, Partner at Booz & Company, said: “Boards are more likely to keep their chief executives during times of economic uncertainty in order to maintain stability, but they are more willing to make a change when economic stability returns and company outlooks improve.

“In the UK we saw big names such as Philip Clarke taking over from Sir Terry Leahy at Tesco, and Michael Geoghegan who was succeeded by Stuart Gulliver at CEO of HSBC.”

Chief executive of BT Group, Ian Livingston, commented on his first year in office: The best advice I got was from CFOs and HR directors, because they’re people who have a view across the entire business.

“The report will be published today, and in the Summer 2012 edition of strategy+business, Booz & Company’s quarterly business and management magazine.”

Globally, it was found that CEOs appointed from within the company continued to bring in higher returns than outside CEOs.

In 2011, outgoing “insider” CEOs delivered a 4.4% annual shareholder return on local market indices on average, compared to just 0.5% from outsiders.

Despite this, appointment of outsider CEOs remains high globally with 22% of new CEOs coming from outside their organisations, up from just 14% in 2007.

Harshak, added, “The appointment of outsider CEOs is on the rise because in this time of economic uncertainty, industries in turmoil often look for fresh insights and expertise from outside their current sector and market.

“However, these countervailing trends, better-performing insiders and increasing numbers of outsiders, should be a key consideration for any board thinking about making a change at the top.”

Elsewhere in the study, it was found that healthcare, telecommunication services and utilities, were the top 3 sectors for turnover of CEOs.

The average age of UK CEOs leaving office is older at 58.4 years old, compared to 56 in all of Europe.

The tenure of UK CEOs is slightly longer than in the rest of Europe at 7.2 years on average in the UK, compared to 6.9 years in all of Europe.

This was posted in Bdaily's Members' News section by Tom Keighley .