Retired, ousted, or poached, CEOs have been making their way out this year. U.S. public companies have reported 327 chief executive changes up to November this year, as per outplacement firm Challenger, Gray & Christmas. This number is the highest since at least 2010 when the firm began tracking turnover, marking an 8.6% increase from the previous year.
The turnover includes CEOs from prominent U.S. companies such as Boeing, Nike, and Starbucks. The increased pace of change suggests that customers, investors, hedge funds, or boards are becoming impatient with sales declines or strategic missteps in an otherwise robust economy where consumers have shown willingness to spend.
CEO changes slowed during the pandemic due to challenges like lockdowns, remote work, supply chain disruptions, and survival concerns. Subsequently, companies faced issues like higher borrowing costs, inflation, labor shortages, changing consumer preferences, and other obstacles.
In 2021, there were 197 CEO replacements, the lowest number in the past 14 years. Clarke Murphy, managing director and former chief executive of Russell Reynolds Associates, noted that the cost of capital and the speed of transformation are leading to faster turnover. He mentioned that poor performance stands out more in a strong market, prompting boards to act swiftly.
Consumer-focused companies typically experience higher turnover compared to industries like oil and gas or utilities, which have more internal and longer-tenured CEOs. Despite a decrease in the number of public companies, there has been a recent surge in CEO turnover.
Some notable U.S. CEO changes this year include the ousting of Intel’s CEO Pat Gelsinger, the departure of Boeing’s former CEO Dave Calhoun, and Starbucks appointing Chipotle’s CEO Brian Niccol. Additionally, Nike replaced its CEO John Donahoe, and Peloton saw changes in leadership with Barry McCarthy and Peter Stern taking over as CEOs. Kohl’s CEO Tom Kingsbury is stepping down, and WW International announced the immediate departure of CEO Sima Sistani.
This information was contributed by CNBC’s Gabrielle Fonrouge and Amelia Lucas.
