Global CEO Turnover Rises 10 Percent In Past 12 Months™
CEO departures at the world’s 500 largest revenue-producing companies jumped 10 percent from 2006 to 2007, according to global public relations firm Weber Shandwick’s ongoing CEO Departures™ analysis. The CEO departure rate is returning to 2005 levels.
“Given stagnant markets, fierce competition and a complex business environment, it is not surprising that CEO turnover has risen sharply,” says Weber Shandwick’s Chief Reputation Strategist Dr. Leslie Gaines-Ross. “Although many CEOs leave for ordinary reasons such as retirement and succession planning, an increasing number also leave involuntarily. Just as CEOs receive most of the credit when things go right, they are expected to accept the majority of the blame when things go wrong.”
Study Reveals European Global 500 CEO Ousters On The Rise While North American CEO Turnover Declines™
In a surprising shift, a Weber Shandwick study reveals that European CEO departures among the 500 largest revenue-producing global companies increased 41 percent in the first three quarters of 2007 compared with the same period in 2006. According to the latest Global 500 CEO Departures™ study by global public relations firm Weber Shandwick, departing European chief executives were also more likely to be forced out of office than North American and Asia Pacific CEOs during this 2007 time period.
In comparison, CEO turnover in North America continued to decline from 2006 to 2007 (from 8.7 to 6.7 percent) and Asia Pacific CEO turnover among the world’s largest companies somewhat stabilized (15.5 to 16.4 percent).
“These statistics reveal a growing disparity between North American and European CEO tenures. While North American CEOs appear to be enjoying somewhat more job security than ever before, European CEOs are now facing greater pressure to perform or pay the price,” said Dr. Leslie Gaines-Ross, Weber Shandwick’s chief reputation strategist and leading CEO reputation expert. “Despite regional differences, the fact remains that the chief executive position remains a treacherous one when you consider that over 10 percent of the world’s largest companies lost their CEOs in the first three quarters of 2007. This departure rate amounts to a CEO departure among the world’s largest-revenue producing companies nearly every 5 days.”
North American CEOs Have Longest Tenure Among Global 500
Among the upper echelon of the world’s most powerful CEOs, North American CEOs had longer tenures in 2006 than their European and Asia Pacific counterparts. According to Weber Shandwick’s Global 500 CEO Departures™ study, the average tenure of departing North American CEOs was 8 years, 6 months versus 6 years, 10 months for European CEOs and 4 years, 3 months for Asia Pacific CEOs. Significantly, the tenure of North American CEOs increased 20 months from 2005. These findings are based on CEO departures at the world’s 500 largest revenue-producing companies.
“The length of CEOs’ terms often correlates with their level of success. The lengthening of North American CEO tenure bodes well for corporate America and possibly reflects better board selection and succession planning,” according to Weber Shandwick Chief Reputation Strategist and CEO expert Dr. Leslie Gaines-Ross. “For the largest companies in the world, an average tenure of nearly 6.5 years is a welcome sign of stability and strength.”
Global 500 CEO Departures at 15 Percent and Sweep All Regions
Weber Shandwick’s Global 500 CEO Departures™ study reveals that a sizeable 15% of the world's largest companies experienced a chief executive change in 2006. Strikingly, Europe experienced the highest rate of CEO turnover when compared to North American and Asia-Pacific, with 18% of European CEOs leaving their posts in 2006. In contrast, 10% of North American CEOs and 16% of Asia-Pacific CEOs departed in 2006.
| 2006 CEO Departures | Percentage of 2006 CEO Departures Within Region | 2005 CEO Departures | Percentage of 2005 CEO Departures Within Region | |
|---|---|---|---|---|
| # | % | # | % | |
| Total | 74 | 15 | 83 | 17 |
| North America | 18 | 10 | 34 | 18 |
| Europe | 33 | 18 | 28 | 15 |
| Asia Pacific | 20 | 16 | 19 | 15 |
| Latin America | 3 | * | 2 | * |
Reporting on Weber Shandwick's global findings, the Financial Times attributed the growing European CEO turnover rate to rising investor activisim and differences in corporate governance.
Weber Shandwick’s Global 500 CEO Departures study is based on CEO departures at the world’s largest companies by revenue according to Fortune magazine’s Global 500 ranking.
CEO DEPARTURES STUDY™
The Weber Shandwick CEO Departures Study™ analyzes key trends among chief executives at the 500 largest revenue-producing U.S. companies along the following dimensions: turnover, the presence of interim CEOs, successions of insider vs. outsider CEOs and tenure between 2001 and 2005.
In a surprising shift, CEO departures fell in the first three quarters of 2006 compared with the same period in 2005. The decline is a dramatic change from the rising CEO departures that had been occurring since 2000. It could also signal greater confidence in CEOs holding office today and less turmoil at the most senior levels of U.S. business.
The study identified significant changes in the chief executive suite:
For more information on this study, please refer to the full press release: CEO Departures Study