95 August CEO Departures Put 2010 Total Over 2009
Turnover among the nation’s chief executive officers increased slightly in August, as 95 CEOs announced their departures, 8.0 percent more than a 16-month low of 88 in July. Perhaps more notable than the number of CEO departures in August was the fact that they included high-profile and unexpected exits at such major companies as Hewlett-Packard, Sara Lee and General Motors.
While the August figure was up from the previous month, it represents the third lowest departure total of the year, according to the CEO turnover report released Wednesday by global outplacement firm Challenger, Gray & Christmas, Inc. August turnover was six percent lower than the same month a year ago, when 101 CEO changes were recorded. This marks just the third time in 2010 that monthly CEO turnover was lower than the corresponding period in 2009.
Overall, the pace of CEO departures is slightly higher than a year ago with 856 changes announced through August, compared to 834 at this point last year.
Health care led all industries in turnover in August with 19 CEO changes, bringing the year-to-date total for the sector to 142. That is 19 percent more than the 119 CEO changes announced this year in the second-ranked government and non-profit sector. The third most volatile sector, financial services, has seen 81 CEO departures this year, including eight in August.
The computer sector had 10 chief executives leave their post, including one of the most notable departures of the month, Hewlett-Packard’s Mark Hurd, who resigned under pressure from the board of directors after an investigation uncovered an inappropriate relationship and falsified expense reports. The Hurd story continues to grab headlines, as Oracle CEO Larry Ellison, who was outspokenly critical of HP’s decision to force its leader to resign, hired Hurd as co-president on September 6. Within 24 hours, Hewlett-Packard filed suit to block the hire, claiming Hurd could reveal trade secrets to his new employer.
Other high-profile CEO departures in August included Brenda Barnes, chairman and CEO of Sara Lee Corp., who left to focus on her health after recovering from a 2005 stroke. General Motor’s CEO Ed Whitacre, who replaced ousted CEO Fritz Henderson on December 1st, announced he will leave GM at the end of the year, after overseeing vast improvement in GMs operations. Ann Moore, CEO of Time, announced that she will retire in September.
“These high-profile CEO exits often shine a spotlight on the company and it is not always flattering. Many questioned HP’s wisdom in forcing out a CEO who was responsible for turning the company around. Making matters worse is that they did not have much a succession plan. As a result, the company was hammered on Wall Street. GM, on the other hand, did it right. Whitacre always said he would only stay until the company got turned around. He accomplished that, announced his departure well in advance and named his successor,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“However, even high-profile departures executed well can leave companies in a state of volatility. New CEOs often mean changes for the other c-level positions as the new leader brings in his or her own team. It may not happen overnight, but it usually happens. A new CEO does not just mean change in personnel. It usually means structural or operational change. In the case of Time Inc., for example, the new CEO will oversee the company’s publications conversion from a money-losing print format to a digital format, which is still unproven in terms of being profitable,” said Challenger.