Why have more than 1,300 CEOs left their post in the past year?

“Boards have been too compliant and they’re finally recognizing it’s their job to be vigilant about chief executive misbehavior,” said one advocate for corporate governance.
A unique conference table set up for a meeting.
Mint Images / Getty Images/Mint Images RF

Breaking News Emails

Get breaking news alerts and special reports. The news and stories that matter, delivered weekday mornings.
SUBSCRIBE
By Claire Atkinson

Chief executives are leaving in record numbers this year, with more than 1,332 stepping aside in the period from January through the end of October, according to new data released on Wednesday. While it's not unusual to see CEOs fleeing in the middle of a recession, it is noteworthy to see such a rash of executive exits amid robust corporate earnings and record stock market highs.

Last month, 172 chief executives left their jobs, according to executive placement firm Challenger, Gray & Christmas. It's the highest monthly number on record, and the year-to-date total outpaces even the wave of executive exits during the financial crisis.

The list of CEOs stepping down includes some who have left amid controversy. McDonald’s announced on Sunday it was "separating" Steve Easterbrook as president and CEO after he admitted having a consensual affair with another employee. WeWork's founder and CEO Adam Neumann stepped down two weeks ago, accepting a $1.7 billion golden parachute in exchange for walking away from a disastrous IPO. That same week, Kevin Plank, the billionaire founder of leisure wear firm Under Armour, confirmed he was stepping down. Under Armour confirmed this week it is the subject of a federal accounting probe. Nike's longtime CEO Mike Parker resigned the same day, as did the head of eBay.

Let our news meet your inbox. The news and stories that matters, delivered weekday mornings.

Controversy or not, it's a pace not seen since 2002. The last big wave of CEO departures came in 2008, at the start of the financial crisis, according to the company’s data.

“You expect a high turnover during a recession period," Andrew Challenger, the company's vice president, told NBC News. "To see more turnover during a period where companies are doing very well is surprising.”

However, plump exit packages can make it tempting for chief executives to throw in the towel. Fears of an impending recession may also prompt leaders to step down to get ahead of risks to their legacy, said Nell Minnow, an advocate for corporate governance and vice chair of ValueEdge Advisors.

The #MeToo movement has felled a fair number of leaders, from CBS chairman and CEO Les Moonves to billionaire casino magnate Steve Wynn and Intel's chief Brian Krzanich. It's a sign not just of heightened accountability, but of investor pressure, experts say.

“You could say there’s a cancel culture in the boardroom,” said Minnow. “Boards have been too compliant and they’re finally recognizing it’s their job to be vigilant about chief executive misbehavior.”

Typically, chief executives last just five years in their jobs, according to a study from business consultancy PricewaterhouseCoopers, which also found that in 2018 more chief executives left because of lapses in ethical conduct than for the typical complaint of poor financial performance.

“McDonald’s is yet another example of how the #MeToo movement has entered the boardroom,” said Amelia Miazad, director of the Business in Society Institute at the University of California Berkeley Law school. “We can expect to see more corporate boards institute a zero tolerance policy.”

However, in some cases, pressure from activists and regulators can end up pushing boards to oust a leader for no reason other than "a stock pop," said Jeffrey Sonnenfeld of the Yale School of Management, who has been studying chief executives since the 1970s.

"They go for the symbolism of sacrificing a CEO. That just creates disruption and many, many good people have been forced from office,” Sonnenfeld told NBC News, noting that companies who fail to genuinely address values and issues simply end up with another leader to face the music.

One bright spot in Wednesday's report is that gender equality can benefit from changes at the top, with women replacing men in top jobs in greater numbers. In 2010, 77 women replaced men in the top leadership position. In 2019 through October, that number is 160.