CEO departures at fastest clip since 2014

Executive looking out window
More CEOs are having to leave the corner office. (Getty/Tom Merton)

CEOs continue to leave their positions at a rapid rate, with the latest report showing the highest number of quarterly departures since 2014.

Some 341 CEOs left their positions in first-quarter 2018, compared to 348 who left their posts in the third quarter of 2014, according to the data by Challenger, Gray & Christmas.

The first quarter showing was up 16% from the 294 CEO changes tracked in the final quarter of last year. This year’s total was up 13% from the 301 CEO exits in the first quarter of 2017.

“The growth we’ve been seeing in the last few months does not seem sustainable in the long term. In fact, we only added 103,000 new jobs in March, according to the Bureau of Labor Statistics,” said Andrew Challenger, vice president of Challenger, Gray & Christmas, in a statement.

“As wages grow and unemployment hovers near 4% and with the implementation of new tariffs and Wall Street reactions to the same, companies may be preparing for a readjustment in the markets, which may mean new leadership,” Challenger said.

So far this year, women have comprised 23.7% of all CEO replacements. That is compared to 19.7% of CEO replacements in the first quarter of 2017 and 18% of CEO replacements in all of 2017.

2018 CEO Replacements by gender:

Women replacing women

21

Men replacing women

23

Women replacing men

44

Men replacing men

186

Total

274

 

 

 

 

 

 

 

 

 

 

The government and nonprofit sector continues to lead all industries in departures with 64, of which 19 occurred in March. Computer companies have announced 40 exits so far this year, with 11 last month. Health care and products firms have announced 36 CEO exits in 2018, including ten in March. Financial companies reported 34 through the year.

Most CEOs (104) left their posts due to retirement, while 103 have stepped down into other positions within the company, usually as a Board Member or other C-level executive. Another 47 resigned their positions. Three CEOs left due to scandal so far this year, while another three were fired from their roles.

California companies saw the highest number of CEO changes this year with 37, six of which occurred in March. Companies in Texas saw nine departures last month, while Illinois reported seven.

It’s a long-held belief that CEOs get fired (or forced to resign or retire under pressure) because of current financial performance, but an article in Forbes found that thinking wrong. Interviewed were some 1,087 board members from 286 organizations that fired, or otherwise forced out, their chief executive.

Forbes found that most CEOs get fired for "soft issues." Thirty-one percent of CEOs got fired for poor change management, 28% for ignoring customers, 27% for tolerating low performers, 23% for denying reality and 22% for too much talk and not enough action.

A blog by Hello Focus noted that Tech Crunch advises executives to work the key players and to always be on the defensive. Personal relationships with shareholders and board members are essential for staving off an attack from within. It is important for CEOs and founders to always know they are dispensable and recognize their own vulnerabilities. That means knowing what it takes to get fired: for example, whether a simple vote of the board is sufficient or if allegations of wrongdoing are also necessary.