Across industries, a quiet but alarming trend has been swelling—a record-breaking rise in CEO replacements, resignations and retirements. Approximately 1,991 chief executive officers left their positions in 2024, representing a 16 percent bump in departures from 2023.
Forced departures at troubled companies—including high-profile ousters at Intel, Starbucks, Boeing, Nike, CVS, Hertz, Stellantis and Peloton Interactive—undergird the trend. But the number of CEOs voluntarily making unplanned departures has also been rising, according to executive placement firm Russell Reynolds Associates. “You could call it ‘premature succession,’ but we’re seeing evidence of an increase in the frequency and acceptance of CEOs stepping down from their roles, citing pressure, life-priority choices or simply that the conditions for their success are compromised,” says Stephen Langton, head of the board and CEO advisory practice in Asia Pacific for Russell Reynolds.
Patrick Thean, an executive coach and CEO of Rhythm Systems, says that “more CEOs are leaving ‘before you fire me.’ If CEOs don’t believe they’re going to have a chance to succeed, then there’s a good chance they’ll take themselves out.”
Boards have been taking note. In fact, 61 percent of directors report that recent departures at prominent companies have sparked new conversations about the risk of senior level turnover inside their companies, according to a recent survey by Corporate Board Member and Farient Advisors.
CEOS IN THE CROSSHAIRS
Directors looking to understand and address the exodus can look first to a number of drivers, including the tremendous pressure today’s leaders face contending with volatility and unprecedented change in an unforgiving market. Focus on short-term performance, geopolitical turbulence and talent concerns have all escalated in recent years. When the headwinds hit, CEOs find themselves squarely in the firing line, as Bill George, former CEO of Medtronic and a former board member at Goldman Sachs, ExxonMobil, Novartis and Target, points out in this issues’s cover story (see p. 16). “I know one case where a CEO was given 16 months,” he says. “How can you possibly turn around a culture in 16 months? They’re reacting too quickly to external forces, and that’s not right.”
Additional challenges stem from the aftermath of the pandemic, which brought supply chain issues, surging inflation, labor shortages, “return-to-the-office” decisions, a domestic political divide and geopolitical conflict that continue to plague businesses. Many CEOs are tiring of the need to continually adapt and adjust to a litany of headwinds, says Kathy Gersch, chief commercial officer of change management firm Kotter. “They’re experiencing ‘change fatigue.’”
Matt Paese, executive coach and SVP at Development Dimensions International, agrees, pointing out that disruptive forces, such as the influx of AI and its impact on workforces can significantly affect a CEO’s sense of comfort in his or her job and how long they may be planning to stay. “I’m watching CEOs struggle existentially with the arc of that development,” he says. “They’re asking themselves: ‘How do I begin to rethink this? What should I be doing? What should my senior team be doing?’ They’re thinking, ‘Is this what I signed up to do? Do I want to do this?’ I think that is one of the factors affecting CEO tenure, suddenly a very significant one.”
The challenges of managing and developing next-generation talent are also weighing on CEOs. Gen Z—with their focus on digital technology, work-life balance and working remotely—will soon comprise half of the North American labor force, says Ted Bililies, global leader of transformative leadership for AlixPartners consultants. “Many CEOs either don’t know how to handle that or are turned off by it,” he says. “They don’t want to indulge Gen Z.”
MITIGATING DEPARTURE RISK
These driving forces behind unwelcome departures coupled with the potential ramifications of a disruptive leadership transition are prompting some boards to take a more proactive approach to assessing and addressing the risk of their CEO leaving. “Boards and compensation committees are having more candid conversations with their C-Suite executives to understand what kind of challenges and opportunities they’re looking for and to potentially be more open with them about their thoughts on a possible timeframe for retirement than they have in the past,” says RJ Bannister, partner and COO of Farient Advisors. “Having those conversations enables a board or committee to be more planful about choices. It’s the notion of being proactive as opposed to reactive.” (See sidebar, “Compelling With Comp.”)
However, fostering open conversations—particularly amid external market pressures or performance or governance concerns—isn’t always easy. In some cases, a lead director or a board chair who has good chemistry with the CEO can ask those questions and have a really candid dialogue. “But it’s probably more common that there is some level of constraint around those relationships,” says Paese. “This is a tricky one for boards to to do because you’re asking a CEO to let her or his guard down for a minute and say how they’re doing. As one CEO put it to me, ‘You only get to be mostly human as a CEO. You can’t be totally human.’”
Boards may also need to take a hard look at their own practices, vetting whether the board as a whole or some of its members are overly reactive to external factors. Handled poorly by directors or the board as a whole, an aggressive activist investor attack or large share price dip can scuttle CEOboard relations.
A dearth of trust or lack of support from a board can factor significantly in a CEO’s decision to leave, says Paese. “Without a doubt, one of the things that will cause a CEO to start marking time as to how long they’ll be in their job is if managing the board or the board chair is a significant challenge,” he says. “It becomes an obstacle to a peaceful job.”
Relentless pressure coupled with unrealistic goals can prompt a CEO to make a change. “It’s the stress of expectations and constant messaging from a board, or customers, to do more with less,” agrees Dick Daniels, who serves as an executive coach for Chief Executive Group. “That takes a toll physically, mentally, emotionally, relationally and spiritually.”
Boards can seek to strengthen the board-CEO relationship by identifying a director with whom their CEO can meet regularly one-on-one, possibly with a facilitator supporting those conversations. “A coach can ask a question of the CEO and the board chair or lead director that may help clarify expectations around a goal on both sides,” explains Paese. “For example, ‘The question I have for both of you is how aggressive do you think you need to be in this process? Does it need to take place in the next week? The next month?’”
Bringing in a CEO coach who can help leaders navigate the complex emotions and pressures prompting them to consider leaving prematurely is another way boards can potentially head off an unwanted departure. Whether the driver is burnout, misalignment with the board, organizational challenges or external opportunities, a coach can guide the CEO in identifying an alternative solution or approach. “I try to understand if they’re expressing inclinations to walk away and to work with them to explore what’s underneath that,” says Scott Campbell, founder of Seminal Coaching and a Chief Executive Group coach. “What are the drivers? They need to understand the root causes so they can address what’s making them feel the way they do and perhaps get on a different path.”
THE SUCCESSION FACTOR
Some transitions, however, are inevitable, so strong succession plans that surface potential CEO successors equipped for the challenges facing today’s leaders is another way boards should be mitigating the risk of disruptive departures. Identifying and developing internal candidates and regularly reviewing the company’s leadership needs in view of both strategic goals and challenging external forces can minimize the risks of a new CEO hitting roadblocks that derail his or her path.
The demands of leaders today mean boards must rethink how they identify, evaluate and develop potential successors. In addition to traditional strengths, such as industry experience and financial acumen, businesses need CEOs who are technologically fluent and able to engage effectively with stakeholders and to navigate economic and geopolitical uncertainty. “That entails more development, cultivating more internal candidates and more sharing of CEO responsibilities across various members of the C-Suite,” says Paese. “What this means is, it’s really important to have a less hierarchical, singular approach to the CEO as the place where all these critical accountabilities reside completely. The best examples of strong CEO and board dynamics are where the CEO is distributing accountabilities and responsibilities with senior team members… you create more learning and developing so you can see who has the capability to take the CEO role. The board gets way more information about succession that way and will have more choices when it comes to making a selection.”
Ultimately, boards that take that level of forward-looking approach to CEO succession—prioritizing agility, innovation and resilience—will be better positioned to ensure continuity in leadership.
