The role of chief executive officer (CEO) is indeed the most critical of any corporation. While CEOs serve as the face of their respective organizations, consistency at the CEO position has become less frequent than ever before. CEO transitions continue to capture headlines across corporate America, particularly over the last two years. Some notable CEO departures in 2019 include Larry Page from Alphabet Inc. and Steven Temares from Bed Bath & Beyond.
Consequently, inconsistency at the chief executive position has become a key area of concern for corporate boards. In 2019, there were 78 announced CEO departures (both immediate and future) across the Equilar 500. While this represents a slight decline from the 80 seen in 2018, it is still quite an alarming number. Additionally, it appears companies are looking outside of their own organizations to find their next chief executive. Of the companies that announced a CEO departure in 2019, 32% appointed an external CEO—this is an increase from 24% in 2018.
Furthermore, more women are being selected as successors following a CEO departure. Of the announced CEO departures in 2019, 12% named a woman as their next chief executive, while just 6% of companies announcing a similar departure named a female successor in 2018. This could speak volumes to the fact that corporate America is making a concerted effort to promote greater diversity within the C-suite.
Of course, with the appointment of any chief executive comes a significant monetary investment. Average lifetime pay of the 78 departing CEOs in 2019 was $90.2 million, while the median was $58.7 million. Whether the investment put into these CEOs paid dividends or not is really dependent on how each respective organization measured success of their departing CEOs. Regardless, given the high investment that CEOs demand, it is critical that companies have a CEO succession plan to ensure that they appoint the best fit candidate into the corner office, when necessary.