May CEO Turnover Up 73% Over April; YTD Down 27% Over 2019
Published June 10, 2020
Turnover in the top position accelerated in May, as employers at U.S.-based companies announced 83 chief executive officer changes, 73% higher than the 48 CEO changes announced in April, according to a report released Wednesday by global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
Despite the increase over April, May’s total was 27% lower than the 114 CEO exits reported in May of last year. In total, 572 chief executives have left their roles so far this year, down 8.77% from the 627 CEOs who announced their departures in the first five months of 2019, which was the highest five-month total since Challenger began tracking in 2002. This May’s number is the fifth-highest five-month total.
“CEO turnover plunged in April, but is already rebounding in May. CEOs are still mostly staying put as companies continue to battle the uncertainty surrounding the pandemic and current recession,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.
“We may see that the recession causes another exodus of CEOs, like we saw in 2008 and 2009, if it continues into next year. However, if consumers and businesses begin to spend again, the recession could be brief and current leadership may be able to weather the storm,” he added.
In 2008, 1,484 CEOs left their posts, as the credit collapse caused companies nationwide to close their doors or find new leadership. 2008 was the previous record-high year for CEO turnover prior to 2019, when 1,640 CEOs left their posts.
Industries with the Most Leadership Change
Government/Non-Profit sector CEOs announced the highest number of changes in May with 20, a 233% increase over April’s six, but a 26% decrease over the 27 reported in May 2019. This sector, which includes charities, foundations, and government-run entities such as transportation authorities or public education, leads all industries in CEO turnover this year with 93, down 34% from the 141 reported in the first five months of 2019.
“Government employment fell by 1,548,000 jobs in April and May, according to the Bureau of Labor Statistics. This could be caused by cuts in funding at all levels and will only be exacerbated by a deepening recession,” said Challenger.
The Technology sector reported the second-highest number of CEO replacements in May with ten, an 11% increase over April’s nine and a 50% decrease over the 20 reported one year earlier in May. The Tech sector has announced 73 chief executive exits so far this year, 12.3% higher than the 65 recorded in the same time period last year.
“The Tech sector has maintained hiring throughout the downturn and is still a solid sector, especially as more companies rely on cloud-based and remote technologies to continue their work in the current environment. Like in 2019, when we saw record-high CEO turnover during a tight labor market and labor shortage, particularly in Tech, these CEOs may have a plethora of opportunities, which would explain the movement,” said Challenger.
“The majority of job cuts during the pandemic have come from companies in the Entertainment/Leisure sector, which includes bars, restaurants, hotels, and amusement parks,” said Challenger.
“These companies are also making leadership changes as Boards grapple with how to do business without visitors,” he added.
So far this year, Entertainment/Leisure companies have seen 45 chief executive departures, up 114% from the 21 who left their posts through this point last year.
Reasons for the Exit
Of those who gave a reason for leaving their position, the majority of CEOs (18) retired, followed closely by 15 who stepped down. Ten reported their interim period had ended, eight moved on to new opportunities, and another eight resigned.
Exiting CEOs reported an average tenure of 11.4 years, up from April’s tenure of 6.8 years, which equals the previous lowest average tenure recorded in July 2012.
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