McDonald’s has pushed out CEO Steve Easterbrook, but he is hardly the only chief executive who exited a company recently. In October, CEO departures reached a record high.
Challenger, Gray & Christmas tracks CEO departures by month. October’s count was 172, which it described as the highest level since the firm started to track the figure. The count was 14% more than in September and 15% higher than in October of last year. Challenger noted that “September marks the ninth time this year that CEO changes were higher than the corresponding month one year earlier.”
The trend for 2019 is not much better. Year to date, 1,332 CEOs had left, which is 13% higher than the 1,176 CEOs from January to October of 2018. The figure for the period is also the highest since Challenger began applying the yardstick to the data in 2002.
The reasons ranged from “missteps, whether in their professional handling of the company or in their personal lives” to the normal course of business. Compensation is not usually the problem. In some of the largest and most recognizable global companies, chief executives earn in less than an hour as much as a typical employee earns in an entire year — these are the CEOs that are paid 1,000 times more than the average employee.
Andrew Challenger, vice president of Challenger, Gray & Christmas, made the point that scandals, while highly visible, were not the primary trigger for the trend, at least recently: “[W]e’ve seen the majority of CEOs leaving amid normal succession plans. Meanwhile, after a decade of expansion, companies that started ten years ago are finding themselves in a phase where new leadership is needed. Other companies are adapting to changing technologies or finding new leadership based on current economic conditions and forecasts for the coming year.”
Industries with particularly high numbers included government and nonprofit CEOs. These were 35% of the October total. That was followed by technology and financial companies. It is hard to determine the reasons for these trends since some are in the normal course of business.
Among the larger questions is what the road ahead looks like for chief executives. The last time the number of CEO departures was extremely high was during the Great Recession. Many economists believe there will be another downturn in 2020. While turnover this year has been high, next year may well be worse. Some CEOs may be less worried about losing their jobs than others — here are the highest paid CEOs at the largest U.S. companies.
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