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CAREER CORNER
A surge in CEO departures seen [by Michael Kinsman] It’s almost like a roll call of the biggest and most successful companies in the land: The Boeing Co., Eastman Kodak, Merck & Co., Hewlett-Packard, Kellogg and Disney.
And, this is only a partial list of the compa-
Then, of course, some CEO departures in re-
percent turnover rate for the CEOs at the
nies who have replaced their chief executives
cent months may be linked to Sarbanes-Ox-
world’s 2,500 largest public corporations in
this year.
ley, the cumbersome financial accountability
2004, up from 9.8 the year before.
law that is costly, challenging and threatenMore than 1,000 chief executives of large
ing to some executives.
Booz Allen also identified that European companies are being faster on the trigger
U.S. companies have parted ways with their employers in the first nine months of this
Challenger says many chief executives are
finger when it comes to changing CEOs. The
year, or 53 percent more than left all of 2004.
simply leaving of their own accord, perhaps
average tenure of CEOs at European compa-
settling for a lifestyle change. The average
nies was 2.5 years when they left, compared
In the month of September, there were 121
age of departing CEOs in September was 56.1
to 5.2 years in the U.S.
CEO departures, compared to 58 a year ago,
years. By Challenger’s count, when 2005 finally
59 two years ago and 64 three years ago. “Many CEOs are simply deciding that it is
ends, U.S. companies will have replaced
“The surge is CEO departures this year is
time to let someone else take the helm,”
more chief executives than they have for
somewhat surprising, since the economy
Challenger says. “Indicative of these conge-
many years, maybe more than ever.
and corporate earnings have been improv-
nial departures is that more CEOs are stay-
ing,” says John Challenger, chief executive
ing with the company in some capacity, such
Clearly, you can’t blame a sour economy or
of the outplacement firm Challenger, Gray
as a board member or special adviser.”
any other one thing. It’s just part of an evolution of how companies and the executives
& Christmas, which compiled the statistics. “That should theoretically make chief execu-
Challenger reports that 57 percent of chief
tives less vulnerable to profit-hungry boards
executives leaving their posts in September
and shareholders.”
was due to retirement or resignation.
Funny, though, that the turnover in CEOs is
There is no evidence that chief executives of
counterintuitive.
the future will enjoy any more security than today’s. Shareholders are increasingly impa-
Many times companies deal with poor eco-
tient with lackluster financial results, rapidly
nomic times by hoping that steady manage-
changing markets make it more difficult
ment will help pull them through. Even with
for executives to develop long-term strate-
the performance of a particular chief execu-
gies, and Wall Street continues to pressure
tive is questionable, companies may keep
companies for quarter-to-quarter earnings
them because they fear they may spiral even
increases.
farther downward if clients or customers lose confidence in the company.
And then there are the chief executives, who wonder if making high-stakes salaries are
And, certainly when a number of compa-
worth the added stress.
nies change chief executives in good times, it opens up opportunities for movement of
A report earlier this year by the consult-
CEOs from one company to the next.
ing firm Booz Allen Hamilton found a 14.2
PAGE
who run them look at the role of the CEO. © Copley News Service