CEOs left their companies at a rapid clip in January, with 132 departures, the highest in 8 years, according to a report by outplacement firm Challenger, Gray & Christmas.
Scandals at companies have taken a toll, which may have contributed to the departures exceeding the average number of 106 exits in January.
But there are other reasons, said John Challenger, CEO of Challenger, Gray & Christmas, in a statement.
“January is typically a busy month for CEO turnover, as companies have made leadership decisions in the fiscal year’s end for the upcoming year,” Challenger said.
Last month’s high total may also “signal that companies are coming to grips with how recent legislation may impact operations, and have chosen new leadership to guide their companies through any changes,” added Challenger.
The average tenure for exiting CEOs in January was over 17 years, the highest on record. That may suggest “boards are replacing long-term CEOs for someone with new ideas and ways of doing things,” Challenger said.
And there will be more to come. Novartis AG said in January its CEO was stepping down, as did Papa John’s, Revlon, Mattress Firm and Xilinx, among others.
The 132 January departures compare with 95 in December, Challenger Grey said in a separate report. The December number was the lowest since 2016 and included 11 exits amid sexual misconduct allegations. The number that left for that reason was 266% more than in 2016. In fact, a total of three CEOs left for that reason in each of the last three years.
The departures will likely be followed by stock volatility. A paper in the Australian Journal of Management looked at returns worldwide and found disruption when CEOs depart, especially when the CEO does not leave voluntarily.
“We find strong evidence that the level of stock return volatility increases following announcements of CEO departures, and that the increase is significantly higher following announcements of forced departures compared to voluntary departures,” the paper, “CEO Departures and Market Uncertainty,” said.
“The results are consistent with signaling effect theory in that forced dismissals convey previously unknown information to the market,” according to the paper. “Returns are also more negative for a forced CEO departure.”