People

CEO Turnover Sets Record in September

A new survey says many more CFOs will have to get used to a new boss this year.
Stephen TaubOctober 10, 2006

Many CFOs lost their strategic partner last month as a record 152 CEOs left their positions, breaking the prior of record of 148 set in May, according to Challenger, Gray & Christmas, an outplacement firm. The September record works out to 7.6 CEO exits per business day.

A total of 1,112 CEO changes have occurred this year, up 10 percent from the 1,014 changes announced through September a year ago, setting the stage for 2006 becoming the biggest CEO turnover year on record, according to the study.

Indeed, the October CEO churn count just increased by one on Tuesday morning when officials at Monster Worldwide said founder Andrew McKelvey resigned as chairman and chief executive officer citing an internal review of the company’s stock option practices. “I simply can no longer dedicate the number of hours required by Monster’s rapid global growth and the additional demands of time associated with the ongoing historical stock option grant review,” he said in a statement.

Looking back, September’s CEO turnover count was one-third more than the 114 recorded in August, and 26 percent more than the 121 announced in September 2005, according to the monthly report released.

What’s more, the survey data indicates that many exiting CEOs didn’t stick with their jobs very long. Of the 387 departure announcements made this year in which tenure data were revealed, 28 percent of the CEOs were on the job for less than three years, according to Challenger. For the 13 percent who held their posts for less than a year, the average tenure was less than six months.

Of the 152 CEOs who left their jobs in September, nearly half (46 percent) resigned or stepped down. Twenty-two left to take jobs at other companies. Eight CEOs were fired or forced to resign. All told, 517 CEOs have either resigned or stepped down this year alone. (Challenger defines “stepped down” as individuals leaving the CEO position, but staying with the organization in some capacity.)

Through September, 275 CEOs have retired. Just 23 have been fired. “It is rare for a CEO to be officially fired,” said John Challenger, chief executive officer of Challenger, in a press release. “Boards may apply pressure or force a chief executive to leave, but they often allow the executive to announce his resignation, thus sparing his or her dignity. It takes a major infraction for a CEO to be publicly fired.”

In addition, a few companies have undergone several changes at the top, noted the survey. In September, for example, struggling computer retailer CompUSA named its second CEO in four months. For its part, Gateway has had five CEOs in six years, Challenger pointed out.

“Perhaps the only job today that is more tenuous than chief executive is head coach for a professional sports team,” said Challenger. “Our most recent survey showed National Football League coaches’ average tenure is 3.8 years.”