Where Have All the CEOs Gone?

See the latest issue of Briefings at newsstands or read in our new format here.

By: Peter Lauria

It used to be a job with some tenure. But in today’s pressure-packed era, the corner office is becoming vacant at an alarming rate.

According to the latest data, more than 800 CEOs have departed their positions through the first five months of 2023, the highest total through this point in the year since exits started being tracked in 2002. That’s in stark contrast to last year, when departures were among the lowest on record. As it currently stands, CEO exits could shatter the previous record of 1,640 departures set in 2019, when the #MeToo movement shone a spotlight on CEO misconduct.

Such trends spark an obvious question: why? Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, sees the exodus of CEOs as symptomatic of the “Great Retirement” trend that hit older workers during the pandemic. After a three-year run navigating one of the most difficult business environments ever, CEOs are spent, says Elson: “They’re human just like everyone else.” Officially, in fact, retirements as a trigger for stepping down are up about 20 percent over last year.

But boards are also getting more proactive about taking action on underperforming leaders. Over the last two years, because of the volatile economic conditions, corporate valuations and performance have been all over the place. And while boards were more forgiving during the pandemic, opting for stability over change, the return of activist investors is creating real fear among directors. “Boards are afraid activists will move against them,” Elson says, adding that it’s sometimes easier to dump a low-performing CEO than risk a costly proxy fight.

For their part, some CEOs have also gotten in hot water by weighing in on political and social developments, creating upheaval for operations and shortening their tenure. “Some CEOs are wading into culture wars unsuccessfully,” says Torrey Foster, managing partner of Korn Ferry’s North American Consumer Markets practice. “They should stay out of the fray.” In some high-profile cases, leaders have gone against their advisors’ wisdom and stumbled when responding to calls to action from their own employees and investor base. “It has cost them their jobs,” Foster says.

Jane Stevenson, global leader of the CEO Succession practice at Korn Ferry, sees “a bit of a changing of the guard” at work in the current trend lines. She says the intensity of the business landscape and the taxing nature of a CEO’s role today speak to the need for boards to place strong emphasis on developing enterprise leaders—people who can run and change the business simultaneously—as part of their succession efforts. Korn Ferry research shows that only 14 percent of current leaders possess the skills and traits needed to carry out this dual mandate, however. “The level of engagement needed from leaders to manage performance and create change is at unparalleled heights,” says Stevenson.

With departures likely, she believes directors need to double down on succession plans, keeping a close eye on the talent pipeline. “We are in transitional times, and CEOs won’t be exempt.”