Economy

CEO Turnover Jumped by More Than a Third in July 

The number of U.S. CEOs who lost or left their jobs in July increased by 37% month over month, from 91 in June to 125. The July total nearly equals 124 departures in the same month a year ago. The January 2020 total of 219 set the record for the highest CEO turnover for a single month.

Outplacement firm Challenger, Gray & Christmas released its June report Wednesday morning, noting that for the first seven months of 2020, 788 CEOs have left their positions, down by 7.3% compared with the same period last year.

In all of 2019, a total of 1,640 CEOs left their jobs, a nearly 13% increase from the prior year’s total of 1,452. Of the 2019 total, three were due to allegations of sexual misconduct. In 2018, 11 CEOs left their jobs following allegations of sexual misconduct.

The July report noted that one CEO stepped down because of racism. In June, three CEOs were replaced due to racism.

Replacing a CEO during the COVID-19 pandemic is a “completely novel experience,” according to Challenger, Gray Vice President Andrew Challenger. He added, “The entire CEO hiring process may have taken place remotely. Additionally, new CEOs may be leading companies from their homes for some time to come.”

A total of 28 government/nonprofit sector CEOs departed in July, more than in any other category. For the year to date, 148 CEOs in this sector have departed, the most of any sector, but 21% fewer than in the same period last year.

Of the CEOs who departed in July, 23 retired and 16 found new opportunities. According to Challenger data, stepping down into a different role within the company was the most frequent reason for a CEO departure in July. A total of 35 CEOs stepped down last month.

The average age of a departing CEO in July was 58.0 years, compared to an average age of 59.2 among 2019’s departing chiefs. The average tenure of these CEOs was 11.6 years last month, compared with 9.0 years in July 2019.

The number of departing CEOs who were replaced by outsiders in the first seven months of 2020 rose from 328 in the six months through June to 381 through July. In 2019, the full-year total was 784.

By gender for the year to date, 108 women have replaced men in the top job, while 62 men have replaced women and 54 women have replaced other women. Men replaced men 474 times in the first seven months of the year, and 23.2% of all new CEOs named in the same period were women.

According to the report, no CEO was terminated in July and two were forced out by scandals.

Texas companies saw the highest number of CEO changes last month with 16. For the year to date, 63 Texas-based CEOs have left their jobs, down from 68 in the same period last year. Twelve companies in California and 12 in Florida also saw CEO departures last month.

U.S. employers announced 262,649 job cuts in July, a jump of 54% from June’s 170,219 job losses, according to Challenger, Gray’s monthly report on job cuts. In July, COVID-19 was named as the cause of 63,517 job cuts, while another 60,831 were attributed to lack of demand and more than 17,000 were the result of voluntary severance or buyouts. For the year to date, the coronavirus pandemic is responsible for nearly 1.1 million job losses.