Exit Lessons

What can we learn from a rash of untimely CEO departures?

Eric Schmidt’s post-Novell Google triumph is proof that CEO comebacks are possible.

Summer began with a series of back-to-back surprise leadership exits at more than a dozen firms, including Petrobras, Qualcomm, WPP, Air France- KLM, JCPenney, Xerox, Campbell Soup, Mattel, Samsonite, Athenahealth, Gamestop and Service-Master. Equilar recently reported that the median tenure for S&P 500 CEOs is now five years, but many of these leaders didn’t even survive two— and all left abruptly.

These unplanned transitions offer lessons to sitting CEOs:

Build a resilient board.

Fearful of their own fragile reputations, directors often fail to back management in the face of outside attacks. Just days after the Athenahealth board rejected a low-priced bid from an aggressive activist investor firm, a suspicious chain of misleading—if not outright malicious—reports surfaced about the personal life of CEO Jonathan Bush. This activist firm seemed to employ a similar mudslinging approach to drive Klaus Kleinfeld out of the CEO spot at Arconic. Brazilian state oil company Petrobras sacrificed Pedro Parente to break a nine-day truckers strike over oil prices.

Accomplish your mission—fast.

Having failed to revive legacy brands like Barbie and American Girl, Google alum Margo Georgiadis left the CEO spot at Mattel after just over a year. Marvin Ellison recently abandoned JCPenney, apologizing on his way out the door for disappointing 2018 Q1 results and slow progress in consolidating operations and building branded store departments and omnichannel retailing.

Vet your opportunities.

Departing CEOs should take a lesson from Jamie Dimon. After being fired by Citigroup in 1998, he patiently reviewed great opportunities before taking the CEO post at troubled Bank One, which he then fixed and sold to JPMorgan Chase. Home Depot veteran Ellison recently jumped from JCPenney to No. 2 home improvement retailer Lowe’s. Following a predecessor who was in office for 13 years, Ellison came into the job just after a Q1 report showed healthy revenue and earnings growth despite poor spring weather for home building and remodeling. With the coming construction-friendly summer months, his timing could prove ideal from a benchmarking expectations perspective.

Watch for the rebound.

Reputations can be restored by the right next move. After great star power as CTO of Sun Microsystems, Eric Schmidt left the foundering local network software company Novell in seeming disgrace, then staged a successful return to the frontiers of technology and innovation. Schmidt brilliantly led Google for 17 years of unprecedented growth, effectively erasing the shadow of his Novell setback.

Exit with dignity.

Beware of the board’s lawyers scripting your public exit message. No one believes that a healthy CEO in the prime of life is quitting for more quality time for unspecified new opportunities. Pfizer CEO Jeff Kindler lost out in a board political battle that was wrongly and damagingly explained as due to “Kindler’s exhaustion.” Bush managed to step down from Athenahealth without succumbing to the blame game, stating, “It’s easy for me to see that the very things that made me useful to our company and cause in these past 21 years are now exactly the things that are in our way.”

Jeffrey Sonnenfeld is senior associate dean for leadership studies and Lester Crown professor in management practice at Yale University and president of the Yale Chief Executive Leadership Institute.