Reflecting the larger implications of a hobbled job market, CEO firings have been on the rise in recent days and are expected to stay high for much of 2009, according to the Journal. Six public company CEOs have been fired in the last eight days, with rumors threatening the jobs of many others.
The firing of CEO William Watkins of Seagate Technology was just one of six recent ousters. The other significant firings include Tyson Food’s Richard L. Bond, Borders’s George Jones, Orbitz’s Steve Barnhart, Scott A. Edmonds at Chico’s FAS, and the departure of Gregory Scott from clothing manufacturer Bebe.
Poor economic times are generally dangerous for upper management, as boards look to reinvigorate what is often perceived as a lagging or under-motivated executive. Shareholders often pressure management to outperform industry competitors, which can also lead to shakeups.
“As bad times drag on, you begin to examine the leader’s response,” said Charles Elson of the Weinberg Center for Corporate Governance at the University of Delaware business school.
56 S&P 500 CEOs left their job in 2007, with 61 leaving in 2008. A June 2008 Wall Street Journal survey of 30 large-cap companies that removed CEOs between January 2005 and June 2007 revealed that the shares of those companies had declined far more often than they had increased.
All but two Dow Jones Industrial Average companies suffered declining share values last year.