New research released this week reveals that the number of US CEOs to depart in 2018 was an alarming 25 per cent higher than in 2017.
In a tight labour market and a constantly changing business environment, CEOs are departing their jobs at numbers not seen since the recession. The outplacement firm Challenger, Gray & Christmas reported that more than 1,450 US CEOs left their posts in 2018, the second highest number on record after departures peaked at 1,484 in 2008.
“There’s a lot of uncertainty as we begin 2019. While the job market is strong, with low unemployment and strong hiring numbers, the stock market is in near-constant flux; trade concerns loom in many industries, including manufacturing and technology; and the regulatory environment may change with a new Congress,” said Andrew Challenger, Vice President of Challenger, Gray & Christmas.
The 25.2% jump from the 2017 total of 1,160 was predominately due to retiring CEOs (403), resignation (283) and those that stepped down into other roles in the company (355), usually a board chair position.
PepsiCo CEO, Indra Nooyi, announced her retirement in August after 12 years at the helm of the beverage behemoth – she was one of 40 ‘food’ CEOs to depart in 2018. The government/non-profit sector had the highest turnover by far, with 276 exits, followed by the financial sector (154) in the number two spot and technology (152) coming in third.
The #MeToo movement was keenly felt across business in 2018, with many boards facing pressure to enforce company policies regarding misconduct, even at the highest levels. Eight CEOs left amid sexual misconduct allegations, including CBS Corporation CEO Leslie Moonves who was forced to resign after a dozen women accused him of inappropriate behaviour and sexual assault dating as far back as the 1980s.
Another four CEOs left due to allegations of professional misconduct. Intel Corporation CEO Brian Krzanich resigned in June after the board learned he had a consensual relationship with an employee, which violated company policy. He is now CEO at CDK Global.
Twenty-three CEOs were terminated by their boards, with Challenger noting “boards are anticipating a changing environment and putting leadership in place who are capable of succeeding in it”.
Challenger, Gray & Christmas began tracking CEO departures in 2002 and rely on SEC filings, company press releases and news reports to tally its results. It only includes American companies that have been in business for at least two years.