CEO Turnover Continues to Lag Last Year's Record Pace

The number of U.S. CEOs who lost or left their jobs in October decreased by 23% month over month, from 119 in September to 92. The October total represents a year-over-year drop for the month of 47%. In October of 2019, 172 CEOs left their positions.

Outplacement firm Challenger, Gray & Christmas released its October report Wednesday morning, noting that for the first 10 months of 2020, 1,108 CEOs have left their positions, down by 16.8% compared with the same period last year.

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.

Companies apparently were waiting to see how the November elections turned out before committing to a change in the corner office. Andrew Challenger, vice president of Challenger, Gray, commented: “Undoubtedly companies were waiting for the outcome of the presidential election to inform not just business strategy, but also leadership decisions.”

The report also noted that October’s departures were the fewest since June and the seventh time this year that CEO changes were lower than the same month a year ago.

A total of 17 government/nonprofit sector CEOs departed in October, more than in any other category. For the year to date, 202 CEOs in this sector have departed, the most of any sector but 28% fewer than in the same period last year.

The second-highest number of monthly changes came in the hospital sector where 11 departures were counted. For the year to date, 90 hospital CEOs have left their jobs, about 5% less than the 95 who left through the first 10 months of last year.

Entertainment/leisure companies continue to be pounded by the COVID-19 pandemic, and the coronavirus outbreak has cost 70 CEOs their jobs so far this year. That’s 37% more than the 51 who lost their jobs during the same period last year.

Of the CEOs who departed in October, 27 retired and seven 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 October. A total of 31 CEOs stepped down last month.

The average age of a departing CEO in October was 57.0 years, compared to an average age of 53.3 among 2019’s departing chiefs. The average tenure of these CEOs was 12.2 years last month, compared with 10.7 years in October 2019.

The number of departing CEOs who were replaced by outsiders in the first 10 months of 2020 rose from 503 in the nine months through September to 540 through October. In 2019, the full-year total was 784.

By gender for the year to date, 158 women have replaced men in the top job while 83 men have replaced women and 68 women have replaced other women. Men replaced men 682 times in the first 10 months of the year, and 22.1% of all new CEOs named in the same period were women. October marks the first time this year that the rate of new CEOs who are women has fallen below 23% for the year.

According to the report, one CEO was terminated in October and none was forced out by scandal. One CEO left due to allegations of sexual misconduct.

California companies saw the highest number of CEO changes last month with 15. For the year to date, 163 California-based CEOs have left their jobs, down from 175 in the same period last year. Nine companies in Florida and seven in Texas also saw CEO departures last month.

Earlier this month, Challenger, Gray announced that job losses in October declined by 32% month over month to 80,666, 60% higher than the cuts announced in October 2019. In the first 10 months of this year, nearly 2.2 million jobs have been cut, more than triple the cuts announced in the same period last year. The total number of jobs lost this year is already higher than the previous record total of 1.96 million announced in 2001.

On Thursday, the Bureau of Labor Statistics is expected to report 737,000 new claims for unemployment benefits. That is about 1.8% below last week’s total of 751,000 initial claims for benefits.