The rate of CEO turnover on the rise, study says
If it seems like the revolving door at the top of Corporate America is spinning faster these days, it is. Consulting firm Booz & Co. has just released its 12th annual study on CEO succession, and as The Washington Post reports, it shows that 14.2% of the world's 2,500 largest companies replaced their CEOs last year. That number is up from 11.6% in 2010, and the increase brings the level of CEO turnover back up to historical averages. It also may say something about how boards of directors are feeling about the economy, says Gary Neilson, a senior partner with Booz. During a recession, boards focus on "hunkering down and getting through it," he says. But once the business environment appears a little brighter, they start to think more about making changes. The study, which looks at average CEO tenure, the performance of insider and outsider CEOs, and how many CEOs also hold the chairman's title, examined the differences between turnover rates in large versus small companies for the first time this year. As one might expect, the study found that the largest 250 companies examined had a slightly higher level of turnover than the smaller ones. "There's a lot of public scrutiny for these large companies," says Neilson. That's just one piece of evidence that the pressures on boards of directors by shareholder activists and other investor watchdogs are having an effect. Here's another: The number of CEOs being appointed to combined CEO-chairman roles has dwindled to just 18% of new CEOs. Check out the full story here for more findings in the Booz study.
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