US Companies Lead UK and Europe on Speed of CEO Turnover

CEO turnover is higher in US firms than those in Europe and the UK, with 28% of US bosses departing after less than 36 months at the helm. 03 August 2020 US Companies Lead UK and Europe on Speed of CEO Turnover

Gavin Hinks of Board Agenda covers SquareWell’s latest investor-focused Insight – CEO Appointments & Dismissals at the World’s Largest Companies. The study, looking at data for the 18 months to June this year, SquareWell considers the results as “demonstrating the willingness of US boards to act more quickly in replacing a lead executive”.

Why US companies wave goodbye to problematic CEOs early is difficult to pin down because of the lack of evidence, according to Luca Giacalone, senior ESG analyst at SquareWell. Giacalone notes that US corporates may face much more attention from activist investors. “As such, where there is an underperformance by the CEO, the board may be willing to let him/her go to avoid an activist approach,” he says.

Gavin Hinks also highlights how boards in all territories may be reluctant to air, or revisit, their dirty washing in public. Just 7% of moves are disclosed as formal “dismissals”, though SquareWell finds that 29% could be said to stem from poor performance, a scandal or strategic disagreement. According to disclosures, the most common reason for departure is “resignation”.

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