Over the last year, there was no shortage of executive transitions in the news, as these events became run-of-the-mill stories. Several high-profile CEO departures captured the headlines across America, including the resignations of Steve Wynn as CEO of Wynn Resorts and Les Moonves, formerly the Chief Executive of CBS Corporation. While it is still unclear why the prevalence of these types of resignations has increased exponentially, there is no question that CEO exits, in general, are becoming an area of concern for corporate America.
To shed more light on this topic, Equilar examined CEO exits across the Equilar 500 over the last five years. In total, since 2014 there have been 291 CEO departures. The analysis revealed that in 2018, there were 71 CEO exits—an increase of 26 from 2014. When looking at the data even closer, 42 of those exits were either from a termination or resignation.
There are a host of factors that are driving the steady climb in CEO exits. This includes retirement, poor performance, a change in company direction and CEO scandals. Indeed, corporations must take a swift approach in mitigating the risks associated with a CEO transition.
While it will be worth noting whether these trends diminish or increase over the next year, corporations must be cognizant of the potential impact that a CEO departure can have on a company’s value and put a plan in place to prepare accordingly for a possible transition scenario.