CEO Turnover Spikes to New High

In the face of a worrisome housing climate and a sluggish dollar, CEO turnover spiked in the first quarter of 2008, reaching the highest rate in two years.

There were 745 instances of a CEO change between January and April, according to data gathered by the Liberum Research group on 12,000 North American public companies. This figure marks a 19-percent jump from the 2007 first quarter turnover rate of 626, but just misses the recent high of 755 set in the first quarter of 2006.

If CEO turnover continues at the current pace, this year’s figure will easily break the mark of 2,743 changes set in 2006. “Because May sees a lot of proxy voting, second quarters tend to experience more CEO turnover." --Richard Jacovitz

If CEO turnover continues at the current pace, this year's figure will easily break the mark of 2,743 changes set in 2006. "Because May sees a lot of proxy voting, second quarters tend to experience more CEO turnover," said Richard Jacovitz, director of research at Liberum. "And though turnover often drops in the summer, I see it remaining high and possibly even increasing until late in the first quarter of 2009."

As is typically the case, many of the CEOs resigned or left "to pursue other interests." Rarely are CEOs publically fired. In fact, there were only three cases of a CEO being involuntarily terminated, or at least only three cases where the firing was made public. Many of the repacements came from within, with 221 instances of an employee earning the chief executive post. Another 182 chief executives resigned or retired during the same span.

The most likely motivator behind increased CEO turnover is the continuing ramifications of the credit and subprime mortgage crises. Particularly volatile industries for chief executive change are banking, general manufacturing, and biotech/health services, according to Jacovitz.