CEO Turnover Rates On The Rise

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    Fifteen per cent of CEOs of the world’s largest public companies left last year, up from 14.2 per cent in 2011, a change that has generally enhanced shareholder value, says ‘Time for New CEOs: The 2012 Chief Executive Study,’ by Booz & Co. The 2012 turnover is the second-highest in the 13-year history of the study, lower only than the 15.4 per cent in 2005. Gary L. Neilson, senior partner at Booz, attributed the high global CEO turnover partly to the fact the economy is still coming out of a global recession. During the recession period, turnover declined to 11.6 per cent. The reason for that is companies are hunkered down and don’t make changes. Now that they are coming out of that recession, they are stepping up CEO changes. As well, in the context of the last eight years, there has been this new normal turnover of around 14 per cent or 15 per cent. Boards are taking on their fiduciary responsibility more seriously, including doing more planning for succession and institutional shareholders have influenced corporate boards to strengthen their succession planning.