CEO Turnover Jumps in May
The number of U.S. chief executive officers who lost or left their jobs in May jumped by 73% month over month, from 48 to 83. The May total is 27% lower than a year ago and is the fifth-highest May total since 2002. The April 2020 total was the lowest monthly number since November 2004.
Outplacement firm Challenger, Gray & Christmas released its May report Wednesday morning, noting that for the first five months of 2020, 572 CEOs have left their positions, down by nearly 9% compared with the same period last year. In the fourth quarter of 2019, CEO departures posted an all-time high of 480.
In all of 2019, a total of 1,640 CEOs left their jobs, a jump of nearly 13% from the prior year’s 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.
Vice President Andrew Challenger noted: “CEO turnover plunged in April, but is already rebounding in May. CEOs are still mostly staying put as companies continue to battle the uncertainty surrounding the pandemic and current recession.”
A total of 20 government/nonprofit sector CEOs departed in May, more than in any other category. For the year to date, 93 CEOs in this sector have departed. That is the most of any sector but 26% fewer than in the same five months of 2019.
Challenger added: “Government employment fell by 1,548,000 jobs in April and May, according to the Bureau of Labor Statistics. This could be caused by cuts in funding at all levels and will only be exacerbated by a deepening recession.”
Of the CEOs who departed in May, 18 retired and eight found new opportunities. According to Challenger data, retirement was the most frequent reason for a CEO departure in May. Another 18 gave no reason for leaving, and 15 CEOs stepped down into a different role within the company.
The average age of a departing CEO in May was 56.1 years, compared to an average age of 61.4 among 2019’s departing chiefs. The average tenure of these CEOs was 11.4 years last month, compared with 11.1 years in May 2019.
Departing CEOs who were replaced by outsiders in the first five months of 2020 numbered 226. In 2019, the full-year total was 784. By gender for the year to date, 82 women have replaced men in the top job while 49 men have replaced women and 42 women have replaced other women. Men have replaced men 342 times in the first five months of the year, and 24.1% of all new CEOs named in the five-month period were women.
According to the report, just one CEO was terminated in May and one was forced out by scandals.
California companies saw the highest number of CEO changes last month with 16. For the year to date, 93 California CEOs have left their jobs, up from 81 in the same period of last year. Six companies in Florida and New York also saw CEO departures last month.
The good news on jobs in general is that losses appear to have peaked in April, according to Bureau of Labor Statistics data.