The end of the holiday weekend added two recent examples with historical shift on Wall Street: More CEOs than ever are heading for the exits. Over the past 24 hours, chipmaker Intel’s leaders (INTK) and the autogiant Stellantis (STLA) both announced their departures, bolstering the number of CEOs.
The management changes highlight the idiosyncrasies and challenges of each company, from a struggling car lineup to a late release of computer chips. But they also reflect a broader trend in corporate America.
During October, more than 1,800 CEOs announced their departure, according to the data by global outplacement firm Challenger, Gray & Christmas. That’s the highest year-to-date number since the firm began tracking CEO changes in 2002. The number of departures was up 19% compared to more than 1,500 departures in the same period last year, which was the previous year to date. recording
Boards of directors are becoming increasingly independent, holding their CEOs accountable for underperforming — both in terms of earnings and stock price, David Kass, a finance professor at the University of Maryland, told Yahoo Finance. He said the average CEO tenure is shrinking as a result of these performance pressures.
The huge stock market growth over the past two years—the S&P is up about 20% in 2023 and is set to increase by the end of 2024—also pose challenges for U.S. companies. The short-term return is significantly higher than the long-term average. And a few big winners, including the Magnificent Seven tech stocks, stand out from the crowd. That causes boards of underperforming companies to put pressure on their CEOs to deliver better results, Kass said.
Consulting firm Russell Reynolds, which also tracks CEO changes, said the high turnover reflects a growing appetite for risk and “a desire for leaders who can navigate the increasing complexity of the macro business environment, including technological transformation, sustainable development, geopolitical crises and social problems”.
Recent changes at Starbucks (SEX) illustrates some of these shifts. Poached from Chipotle, whose stock has increased nearly 300% over the past five years, CEO Brian Nicol was hired by bring turnover at the battered coffee chain, where shares were barely positive over the same time period. His predecessor, Laxman Narasimhan, served as CEO for less than 2 years. Also, Michael Conway, who served as CEO of Starbucks North America, resigned after only six months in the role.
