CEO Departure Reaches Record High in 2024, Why Are These Top Executives 'Jumping Ship'?

Despite the prosperity of the stock market, which has led to historically high bonus payouts for CEOs of U.S. listed companies this year, there seems to be an increasing frequency of management turmoil—industry statistics show that the number of CEOs who have announced their departure from U.S. listed companies this year has reached a historical high.

Data from consulting firm Challenger Gray indicates that by November of this year, as many as 327 CEOs of U.S. listed companies had announced their departure, surpassing the record of 312 set in 2019.

The revolving door of CEOs has also led to a shortening of their tenure. Data from consulting firm Russell Reynolds shows that in the third quarter, eight CEOs left their positions before completing three years of service, marking the highest number of short-term CEOs since 2019.

Why Are CEOs Leaving?

The reasons for CEOs' departures are obviously diverse: Some leave due to disagreements with other management members, while others depart voluntarily due to poor performance. Of course, there are also many CEOs who seem to have found more lucrative career directions.

Intel CEO Pat Gelsinger is undoubtedly a typical case of a CEO being forced out. Intel announced on December 2nd that its CEO, Pat Gelsinger, had retired and resigned from the board, ending his more than 40-year career at Intel.

Gelsinger, 63, took on the role of Intel's CEO in 2021 amidst a crisis but failed to turn the company around. He himself became a defendant in August of this year. It is reported that Intel's board of directors gave Gelsinger an ultimatum at a board meeting in late November: resign or be fired. An informed source stated that the Intel board had concluded that Gelsinger must leave because his plan to turn the company around was not showing results quickly enough.

Similarly, Boeing CEO David Calhoun also left amidst company troubles. Boeing announced in March this year that David Calhoun would be leaving by the end of the year. In January, an incident occurred on an Alaska Airlines-operated Boeing 737 Max 9, nearly new, where a rear cabin door that could be used as an emergency exit fell off in mid-flight. This incident plunged Boeing into another safety crisis following years of issues in its defense and commercial aerospace businesses.

Industry insiders who advise CEOs have indicated that with President-elect Trump promising tariffs and threatening free trade, many CEOs of companies on the global supply chain are also leaving (or considering retirement) rather than facing these imminent troubles.

Actively Switching to Non-listed Companies

Of course, there are also many CEOs who chose to switch jobs actively this year. Rich Fields, head of the board efficiency business at Russell Reynolds, stated that an increasing number of CEOs from listed companies are considering positions at non-listed companies.

He said in some places, these people can make more money than being CEO of a listed company. Non-listed companies are not subject to the same disclosure rules and often use equity compensation more freely. If a non-listed company suddenly collapses, the CEO can still make a lot of money, whereas if they are at a listed company, they are subject to constraints from peers and shareholders.

Jason Baumgarten, head of Spencer Stuart's CEO business, stated that in the past, being a CEO of a listed company might have been the pinnacle of one's career. However, the performance assessments that come with it are now becoming a challenge. Although it is not always clear whether CEOs choose to leave or are forced out, nowadays, when performance is affected, boards often feel greater pressure and choose to take action sooner.

CFOs Are Moving On the Same 'Track'

In fact, CEOs are not the only executive positions that are becoming more frequently vacant.

According to a report by software company Datarails in December, the tenure of CFOs at large U.S. listed companies has also decreased from an average of 3.5 years two years ago to just over three years. Of these, very few CFOs ended their term due to promotion to CEO.

Datarails found that from 2018 to 2023, 152 companies each experienced at least three CFOs, including Dollar General, Expedia, and Under Armour.

James Stark, head of CFO business at recruitment firm Egon Zehnder, stated that the average tenure of CEOs at Fortune 500 companies is continuing to decline.