Turnover in the top position slowed in August, as employers at U.S.-based companies announced 109 Chief Executive Officer changes, 13% lower than the 125 CEO changes announced in July, according to a report released Wednesday by global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
August’s total was 31% lower than the 159 CEO exits reported in August 2019. In total, 897 chief executives have left their roles so far this year, down 11% from the 1,009 CEOs who announced their departures in January-August 2019.
“With a global pandemic, a recession, and an upcoming presidential election, executives are faced with making critical decisions during extremely uncertain times,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.
“Some CEOs are rising to the occasion and leading companies through turbulence never seen before. But these challenges can be incredibly difficult for others. Many companies have delayed or abandoned planned actions due to these uncertainties,” he added.
Government/Non-Profit sector CEOs announced the highest number of changes in August with 17, a 39% decrease from July’s 28 and a 43% decrease from the 30 reported in August 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 165, down 24% from the 218 reported in January-August 2019.
“This sector, particularly the Non-Profit sector, is significantly impacted during recessions, as these entities rely on giving and government funding,” said Challenger.
The Health Care/Products sector reported the second-highest number of CEO replacements in August with 14, a 22% decrease from July’s 18, but a 75% increase over the eight reported one year earlier in August.
So far this year, Technology has announced the second-highest number of CEO changes with 102, down 24% from the 134 announced year to date in 2019.
While CEO turnover is down this year over last year, 15 sectors tracked by Challenger are seeing more CEO changes than in 2019. This includes the Automotive industry, which announced 11 CEO exits through August, compared to eight during the same period last year. Last month, Jim Hackett announced he would retire from Ford Motor Co. amid an $11 billion restructuring. COO Jim Farley will replace him.
Of those who gave a reason for leaving their position in August, the majority of CEOs (35) stepped down, followed by 23 who retired, and 13 who reported their interim period had ended.
More outsiders are replacing insider CEOs. According to Challenger tracking, 56% of replacement CEOs are external, on par with the annual rate in 2019. Last year saw the first year external replacements outpaced internal ones since 2013.
Exiting CEOs reported an average tenure of 8.7 years and an average age of 52 years. Year to date, 23.79% of new CEOS are women, up from 22% of women at the end of 2019 and 23.4% by midyear 2020.
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