CEO Turnover Ticks Up in June; 3 Out Over Race
The number of U.S. chief executive officers who lost or left their jobs in June increased by 9.6% month over month, from 83 in May to 91. The June total is 8% lower than a year ago and is nearly 60% lower than the January turnover. 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. It noted that for the first six months of 2020, 663 CEOs have left their positions, down by nearly 9% compared with the same period last year. In the first quarter of this year, 441 CEOs left their jobs, and 222 left in the second quarter.
In all of 2019, 1,640 CEOs left their jobs, a jump of nearly 13% 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 June report noted that three CEOs “left due to racism–one left vowing a person of color would replace him to create a more inclusive culture, one left after making racist comments, and one left because of allegations of racism.”
Vice President Andrew Challenger commented: “The Black Lives Matter movement has led to demands for racial equality and accountability in companies’ highest offices. This may lead to a #MeToo-like reckoning for not only chief executives, but executive teams overall, as workers begin to demand equity in hiring practices.”
A total of 22 government/nonprofit sector CEOs departed in June, more than in any other category. For the year to date, 120 CEOs in this sector have departed, the most of any sector, but 26% fewer than in the same six months of 2019.
Of the CEOs who departed in June, 26 retired and seven found new opportunities. According to Challenger data, retirement was the most frequent reason for a CEO departure in June. Another 15 gave no reason for leaving, and 21 CEOs stepped down into a different role within the company.
The average age of a departing CEO in June was 54.7 years, compared to an average age of 61.6 among 2019’s departing chiefs. The average tenure of these CEOs was 12.0 years last month, compared with 8.7 years in June 2019.
The number of departing CEOs who were replaced by outsiders in the first half of 2020 rose from 226 in the five months through May to 328 through June. In 2019, the full-year total was 784.
By gender for the year to date, 92 women have replaced men in the top job, while 54 men have replaced women and 46 women have replaced other women. Men replaced men 399 times in the first six months of the year, and 23.4% of all new CEOs named in the same period were women.
According to the report, no CEO was terminated in June, and none was forced out by scandal or allegations of misconduct.
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 last year. Six companies in Florida and New York also saw CEO departures last month.
Nearly 1.6 million job cuts have been announced through the first six months of 2020. In that regard, Challenger noted: “The uncertainty surrounding COVID-19 and the current recession makes predicting a trend in the numbers difficult. Past recessions have caused an uptick in CEO departures, but if there is a vaccine or improved treatments by the end of this year, the economy could rebound quickly. In the meantime, with numbers of infections surging in many areas, economic uncertainty remains strong.”