Within the span of a few days last October, high-profile CEOs at Wells Fargo, Caterpillar and Visa all announced they would be stepping down from their posts. Each did so for different reasons, whether it was a high-profile scandal, declining performance over an extended period or a surprising announcement that caught observers off-guard.
Over the past five years, the number of S&P 500 chief executives who have left their positions has increased steadily, according to an Equilar study. As of October 31, 59 CEOs either resigned, retired or were terminated with effective end dates in 2016, more than all of 2015.
There is more than meets the eye when it comes to the increase. In 2016, 22 of the 59 CEOs that had either left their position or announced plans to do so before the end of the calendar year transitioned to the executive chairman of the board role. This represented an increase from just 12 in 2015, which already was a four-year high. In other words, though many of these high-profile CEOs left, they are neither gone nor forgotten, and still have their finger on the pulse.
Turnover is natural, even at the top position, but these recent changes have brought to light changes in corporate governance practices and the fact that succession planning for executives is of paramount importance for boards. Even though a vast majority of these transitions are voluntary, boards must be prepared to have the next generation of executives in line for the corner office.