Should Investors Be Concerned That More CEOs Are Abandoning Ship?

Investing

Published: March 14, 2018 10:20 am

Last Updated: January 12, 2020 2:26 am

Chief executive officers are the captains of their respective ships, or companies, weathering the ups and downs that the markets bring. And although the horizon looks very bright, according to a recent CEO Economic Outlook survey, there are more captains abandoning ship than ever. Should investors be concerned?

The number of CEOs leaving their posts at U.S.-based companies reached 113 in February, 56.9% higher than February 2017, when 72 CEO exits were announced, according to a report released Wednesday by global outplacement consultancy and executive coaching firm Challenger, Gray & Christmas.

Note that February’s total was down 14% from 132 CEO exits in January.

Despite the drop, 245 CEOs have left their posts so far in 2018, the highest January-February total since 2008, when 248 CEOs left in the first two months of the year. The year-to-date total is 22.5% higher than last year, when 200 CEOs left their posts through February.

The Government/Nonprofit sector leads all industries in departures with 45 CEOs out, 25 of which occurred in February. Financial companies announced 31 exits so far this year, with 15 last month. Computer firms have announced 29 CEO exits in 2018, including 10 in February. Health Care/Products companies reported 15, which is on trend with the changing health care landscape.

Most (35) CEOs retired from their posts in February, while another 28 stepped down into other roles in the company, usually as a board member or other C-Suite-level executive.

One hot topic to point out is the #MeToo movement, which continues to call out sexual misconduct in the workplace. There have been two exits due to a scandal involving some form of sexual harassment in this time.

Andrew Challenger, vice president of Challenger, Gray & Christmas, commented:

This year could end up being a big year for CEO changes, as companies attempt to comply with existing legislation and proposed legislation and deal with a tight labor market.

He added:

2008 was a record year for CEO changes, mostly due to the challenges of the recession. We’re currently seeing a strong economy, with over 300,000 jobs added in February and low unemployment. The question is, will this last, and are boards preparing for a change by changing leadership?

ALSO READ: 20 Worst CEOs in America 2017

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