CEO Turnover Rate Rises to Pre-Recession Levels, Finds Booz & Company Annual Global CEO Succession Study

As the global economy begins to recover, CEO turnover at the world's largest 2,500 public companies returned to rates seen during pre-recession years, according to Booz & Company's 12th annual CEO Succession Study. Globally, CEO turnover is now at 14.2 per cent, up 2.6 per cent from 2010; while in the UK, this figure is even higher at 14.7 per cent. These findings suggest that British companies are feeling more confident about making leadership changes and rethinking who is in charge to drive performance. Ashley Harshak, Partner at Booz & Company, said "Boards are more likely to keep their chief executives during times of economic uncertainty in order to maintain stability, but they are more willing to make a change when economic stability returns and company outlooks improve. In the UK we saw big names such as Philip Clarke taking over from Sir Terry Leahy at Tesco, and Michael Geoghegan who was succeeded by Stuart Gulliver at CEO of HSBC."

Booz & Company's annual study of worldwide CEO succession patterns examines the degree, nature and geographic distribution of chief executive changes among the world's 2,500 largest public companies. This year's report, "The New CEO's First Year [http://www.booz.com/media/uploads/BoozCo_CEO-Succession-Study-2011-3.pdf ]" focuses particularly on the challenges for the new executives, who they are, and how they have performed. Chief Executive of BT Group Ian Livingston commented on his first year in office: "The best advice I got was from CFOs and HR directors, because they're people who have a view across the entire business." The report will be published today, and in the Summer 2012 edition of strategy+business, Booz & Company's quarterly business and management magazine.

Globally, insider CEOs who were appointed from within the company, continue to bring in higher returns than outsider CEOs. In 2011, outgoing insider CEOs delivered a 4.4 per cent annual shareholder return on local market indices on average, compared to just 0.5 per cent from outsiders.

Despite this, the appointment of outsider CEOs remains high globally with 22 per cent of new CEOs coming from outside their organisations, up from just 14 per cent in 2007; in the past five years, the share of outsiders has grown the most on average in Utilities, Financial Services and Telecommunication Services.

In Western Europe, this figure rose to 31 per cent, up from just 24 per cent in 2010. Harshak, added, "The appointment of outsider CEOs is on the rise because in this time of economic uncertainty, industries in turmoil often look for fresh insights and expertise from outside their current sector and market. These countervailing trends--better-performing insiders and increasing numbers of outsiders -should be a key consideration for any board thinking about making a change at the top."

For more information or to download the full report, please use the following link: http://www.booz.com/media/uploads/BoozCo_CEO-Succession-Study-2011-3.pdf