As the economy continues its volatile ride, chief executive turnover has reached the highest nine-month total on record and is on a pace to surpass the 2006 year-end record, according to a report by global outplacement and executive coaching consultancy Challenger, Gray & Christmas, Inc.
So far this year, 1,132 CEO departures have been announced, a nine percent increase from the 1,043 CEO exits recorded through September 2007. At this point in 2006, which saw a record 1,478 CEO changes, departures totaled 1,112.
If CEO changes continue at their current level, we could surpass the 2006 total before the end of November. With many companies, including banks, retailers and manufacturers, at risk of takeover or failure, the odds of further CEO departures are high.
September CEO turnover data showed that 140 CEOs left their posts last month, nearly matching the 144 departures recorded in August. The September total was 25 percent higher than the 112 CEO exits in the same month a year ago.
Of the 140 CEO departures in September, only 35 were retirements. Forty-four resigned and another 31 stepped down. The health care sector saw the heaviest turnover, with nearly 41 percent of the 27 September departures resulting from retirement. Meanwhile, the tumultuous financial sector had 18 CEO changes, with 12 (66.7 percent) resigning, stepping down or falling victim to bankruptcy and the credit collapse.
It’s a tough time to be a financial sector CEO, although you will not find too much sympathy for these individuals in the general public. They are coming under fire for taking home enormous salaries and severance packages even as their firms were crumbling around them.
Richard Fuld, the CEO of bankrupt Lehman Brothers, who has managed to hang on to his position for the time being, was on Capital Hill this week answering lawmakers’ questions about the hundreds of millions he has been paid since 2000. We may see more outgoing CEOs follow the lead of Robert Willumstad, the outgoing CEO of insurance giant AIG, which had to be rescued by the federal government. He decided not to take his severance package in light of his failure to turn the company around.