CEO Turnover Grows In August 2012

The number of chief executive officers announcing departures jumped in August to 104, the highest one-month total since February, when 104 CEO changes were also recorded, according to the latest report on CEO turnover released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

August turnover was up 20.2 percent from July, when 83 CEOs announced their departures.  Last month’s total was unchanged from the 104 CEO exits announced in August 2011.  Challenger has now tracked 796 CEO changes in 2012, which is 2.5 percent lower than the 814 CEO departures recorded during the same period a year ago.

For the year, health care continues to see the heaviest turnover.  It leads all other sectors with 161 CEO changes in 2012, including an industry-leading 21 in August.  The government/non-profit sector saw 15 CEO changes last month, including Nancy Brinker of Komen, who left her post amid a string of resignations following the Planned Parenthood rift.

The financial sector saw its heaviest CEO turnover for the year in August, as 14 chief executives vacated their offices, including the announced departure of E-Trade Financial CEO Steven Freiberg, who was removed from his position amid underperforming financials.

“As the economy continues its slow recovery, chief executive officers are under increasing pressure to show financial gains.  Freiberg’s departure is the latest example, but we have seen numerous examples this year across several industries.  Health care giant Wellpoint Inc. pressured CEO Angela Braly to leave due to weak earnings.  At Symantec, former CEO Enrique Salem was replaced with the company’s chairman amid languishing stock prices. There has been a revolving door of CEOs at struggling Internet company Yahoo, which recently named its fifth CEO in as many years, as it seems to be constantly searching for a leader who will make it competitive with rival Google,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

The computer sector is saw 11 CEO changes in August, and has the third highest total of CEO departures for the year with 81. Automotive companies saw the fifth highest total in August with 7, more than in any month previous. Announced CEO changes recorded in August from the auto sector include Fisker, Navistar, American Axle, and Visteon.

Twenty-five CEOs retired from their posts in August, which is the second highest reason cited for CEO departures for the year with 168.  Resignation is the most cited reason with 228, with 23 occurring in August. To date, 135 chief executives, including 21 in August, stepped down, usually staying with the company as a board member or other C-level executive.