Last month, CEOs’ departures increased to 126 from 115 in May ’08 — up by 9.5 percent — according to a recently released study by Challenger, Christmas & Gray, a global outplacement and executive coaching firm. In June ’08, the departures were also higher than June ’07 with 105 CEO exits.
The study finds that “2008 is only slightly ahead of 2007 in CEO exits, suggesting that the current economic conditions have not increased the pace of CEO departures. June’s tally brings the year-to-date total to 724, compared to 719 departures in the first six months of last year.”
“We have not seen a significant rise in the number of CEO exits due to the struggling economy. Companies are looking elsewhere to cut costs, through staff reductions and decreasing operating costs, rather than letting go of their CEOs,” said John A. Challenger, CEO, Challenger, Gray & Christmas.
“External factors, not leadership errors, are creating the trouble for companies, so companies are reluctant to punish CEOs for things that are largely out of their control. We may see CEO turnover decline as the economy worsens, due to the fact that many companies may try to keep the highest tier of leadership intact through the downturn. Any drastic changes at the highest levels of an organization are unlikely to reverse a company’s fortunes in this economy and the tumult may actually make the situation worse.”
The financial and government/non-profit sectors saw the maximum CEO exits with 16 exits each, according to the industry-wise reading of the study. The health-care industry lost 15 whereas the energy sector saw 8 CEOs departures.
“Companies in the energy industry are undergoing major restructuring as they adjust to increasing calls for environmental conscientiousness and the growing demand for alternatives,” said Challenger.
For example, Solar Night Industries, a St. Louis-based maker of solar panels and solar wiring kits for home and business use, was forced to close after their stock prices tumbled. CEO Tom Corbin resigned from the company. Meanwhile, GreenFuel Technology, an alternative energy company based in Cambridge, Massachusetts, gained Simon Upfill-Brown, a former executive at Dow Chemical, replacing Bob Metcalfe who had been serving on an interim basis.
Reasons behind CEO Departures
| Resigned |
41 |
| Retired |
32 |
| Step Down |
19 |
| Interim-period Ended |
17 |
| New Position in Another Co. |
5 |
| Credit Collapse |
3 |
| Another Position within Co. |
3 |
| Health |
2 |
| Fired |
1 |
| Died |
1 |
| Bankruptcy |
1 |
| Acquisition |
1 |
Source: Challenger, Christmas & Gray
CEO Departures Month-by-Month
January
February
March
April
May
June |
2008
134
114
122
112
115
126 |
2007
114
127
103
126
144
105 |
Source: Challenger, Christmas & Gray
