While notable chief executive officer departures by Hewlett-Packard’s Mark Hurd and Sara Lee’s Brenda Barnes have grabbed headlines in early August, CEO turnover in July was relatively subdued; falling to its lowest level in 16 months.
A total of 88 CEO changes were recorded in July, 18 percent fewer than June’s 107 and 30 percent fewer than the 126 CEO changes announced in July 2009. The July total is the lowest since April 2009 when 78 CEOs left their posts, according to the latest report on CEO turnover released Wednesday by global outplacement firm Challenger, Gray & Christmas, Inc.
So far this year, 761 CEO exits have been announced. That is just four percent more than the 733 departures at the same point a year ago. Despite the slight uptick in CEO changes this year, turnover remains well below the record pace set in 2008, which saw 848 departures announced from January through July, and ended the year with 1,484 CEO exits.
“It is not unusual to see a drop in CEO departures during the summer months. In four of the past five years, CEO turnover was lower in July than in June and, in three of the past five years, the July total was lower than the annual average,” noted John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“It is too soon to tell if this July’s decline is part of a bigger downward trend in CEO turnover or simply a byproduct of the typical seasonal cycle that seems to slow corporate activities and decision-making during the summer,” he added.
The most common reason for CEO departures in July was resignation, which accounted for 34 (39 percent) of the 88 exits. The relatively vague “resignation” has been used as the reason for departure 235 times this year, which represents nearly one-third (31 percent) of all the announced departures. Retirement accounts for 205 departures this year, including 14 in July.
The service sector saw the heaviest CEO turnover in July, with 12 departures. It was closely followed by the health care and government/non-profit sectors, which each had 11 CEO changes during the month. While tying for second in July, these two sectors lead all others in CEO turnover for the year. The health care sector has seen 123 CEOs leave their posts, while government and non-profit agencies have lost 108 CEOs.
“These sectors are still trying to find their footing in this recovery. Both continue to struggle amid massive budget shortfalls and may be seeing higher turnover as they lose leaders who are unwilling or unable to guide the organizations through the rough patch,” said Challenger.