Why have more than 1,300 CEOs left their post in the past year?

“Boards have been too compliant and they’re finally recognizing it’s their job to be vigilant about chief executive misbehavior,” said one advocate for corporate governance.





Nov. 6, 2019, 6:57 AM CST
By Claire Atkinson


Chief executives are leaving in record numbers this year, with more than 1,332
stepping aside in the period from January through the end of October, according
to new data released on Wednesday. While it's not unusual to see CEOs fleeing
in the middle of a recession, it is noteworthy to see such a rash of executive
exits amid robust corporate earnings and record stock market highs.

Last month, 172 chief executives left their jobs, according to executive placement
firm Challenger, Gray & Christmas. It's the highest monthly number on record,
and the year-to-date total outpaces even the wave of executive exits during
the financial crisis.

The list of CEOs stepping down includes some who have left amid controversy.
McDonald’s announced on Sunday it was "separating" Steve Easterbrook as
president and CEO after he admitted having a consensual affair with another employee.
WeWork's founder and CEO Adam Neumann stepped down two weeks ago,
accepting a $1.7 billion golden parachute in exchange for walking away from a
disastrous IPO. That same week, Kevin Plank, the billionaire founder of leisure
wear firm Under Armour, confirmed he was stepping down. Under Armour
confirmed this week it is the subject of a federal accounting probe.
Nike's longtime CEO Mike Parker resigned the same day, as did the head of eBay.

Controversy or not, it's a pace not seen since 2002. The last big wave of
CEO departures came in 2008, at the start of the financial crisis, according
to the company’s data.

“You expect a high turnover during a recession period," Andrew Challenger,
the company's vice president, told NBC News. "To see more turnover during
a period where companies are doing very well is surprising.”

CEO churn at record levels

More than 300 CEOs have left their companies since August.
October’s 172 departures is the most in any month in the last 15 years.

However, plump exit packages can make it tempting for chief executives
to throw in the towel. Fears of an impending recession may also prompt
leaders to step down to get ahead of risks to their legacy, said Nell Minnow,
an advocate for corporate governance and vice chair of ValueEdge Advisors.

The #MeToo movement has felled a fair number of leaders, from CBS chairman
and CEO Les Moonves to billionaire casino magnate Steve Wynn and
Intel's chief Brian Krzanich. It's a sign not just of heightened accountability,
but of investor pressure, experts say.

“You could say there’s a cancel culture in the boardroom,” said Minnow.
“Boards have been too compliant and they’re finally recognizing it’s their
job to be vigilant about chief executive misbehavior.”

Typically, chief executives last just five years in their jobs, according to a
study from business consultancy PricewaterhouseCoopers, which also found
that in 2018 more chief executives left because of lapses in ethical conduct
than for the typical complaint of poor financial performance.

“McDonald’s is yet another example of how the #MeToo movement has
entered the boardroom,” said Amelia Miazad, director of the Business in
Society Institute at the University of California Berkeley Law school.
“We can expect to see more corporate boards institute a zero tolerance policy.”

However, in some cases, pressure from activists and regulators can end
up pushing boards to oust a leader for no reason other than "a stock pop,"
said Jeffrey Sonnenfeld of the Yale School of Management, who has been
studying chief executives since the 1970s.

"They go for the symbolism of sacrificing a CEO. That just creates
disruption and many, many good people have been forced from office,”
Sonnenfeld told NBC News, noting that companies who fail to genuinely
address values and issues simply end up with another leader to face the music.

One bright spot in Wednesday's report is that gender equality can benefit
from changes at the top, with women replacing men in top jobs in greater
numbers. In 2010, 77 women replaced men in the top leadership position.
In 2019 through October, that number is 160.




*** This report is from last year, I just found it to be
interesting