High CEO Turnover: Get Used To It

ByDeborah Austin Early CEO departures have become "the new normal" in North America and Europe, spurred by shareholder-value pressures and board activism, suggests a new survey by management and technology consulting firm Booz Allen Hamilton Inc., McLean, Va. Between 1995 and 2001, CEO turnover at major corporations climbed 53% -- with turnover due to poor financial performance jumping 130% -- concludes the survey of the world's 2,500 largest publicly traded corporations. Turnover among European CEOs has increased twice as fast as in North America -- with performance tied to shareholder returns in both locales -- but has remained fairly constant in the Asia/Pacific region, where performance is more linked to net income growth. Industries with highest turnover rates are telecommunication services, energy and information technology. Those with the lowest are materials, utilities and financial services. No matter what their tenure or reason for departing, European and North American CEOs performed markedly better for shareholders in the first half of their reign than in the second half.