CEO Departures Climb in December

Jan. 12, 2011
Outlook for 2011 could improve as economy picks up.

CEO departures rose 35% in December to 107, the highest total since September, according to the final 2010 CEO turnover report released Jan. 12 by global outplacement consultancy Challenger, Gray & Christmas Inc.

CEO turnover for the year was nearly unchanged from 2009 levels.

The 107 CEO changes announced last month was up from 79 in November and up from 105 departures during the year-ago period. The December total was slightly higher than the 103 departures-per-month average recorded in 2010.

Overall, 1,234 CEO departures were announced in 2010, seven more than in 2009. The total is the lowest level since 2004 when 663 departures were announced, according to Challenger.

CEO turnover in 2010 was heaviest in the health care sector, where 201 CEO changes occurred, including 12 in December.

One of the more notable December departures was that of Pfizer CEO Jeffrey Kindler who announced his resignation as CEO and chairman amid declining share prices, expiring patents and reportedly failed products, Challenger reported.

Looking ahead, CEO departures could decline even further in 2011 as the economy improves, says John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

" The economy is improving and many companies may be inclined to maintain stability at the top of the corporate ladder," he says. There is a lot of evidence that consistency in leadership has a positive impact on growth potential. However, we could see heavy CEO turnover in industries going through consolidation. Merger and acquisitions increased in 2010 and are expected to climb even higher in 2011 as companies start spending their accumulated savings on expansion through acquisition. These deals tend to see one of the top executives exit. Many companies have found that naming each top executive from the two merging entities co-CEOs becomes a counter-productive power struggle."

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