CEO Research Paper published

Strategy& (the consulting arm of PwC) recently published its annual CEO Success study 2019.  The paper analyzes the world’s largest 2,500 public companies, defined by their market cap on January 1 2019. The findings were:

  • Ethical lapses on the rise

The study defines CEO dismissals due to ethical lapses as
“the removal of the CEO as the result of a scandal or improper conduct by the CEO or other employees; examples include fraud, bribery, insider trading, environmental disasters, inflated resumes, and sexual indiscretions.”

The overall rate of forced turnovers of CEOs was in line with recent trends, at 20%. But the reasons that CEOs were fired in 2018 were different. For the first time in the study’s history over 19 years, in 2018 more CEOs were dismissed for ethical lapses than for financial performance or board struggles. the first time in its 19-year history that the study has found the majority of CEOs were dismissed because of ethical issues.

  • Long serving CEOs

Long-serving CEOs generally deliver higher shareholder returns than shorter-serving CEOs and are typically succeeded by insiders in a planned succession. However, the successor CEOs significantly underperform and are much more likely to be forced out of office.

  • Turnover rate soars

Turnover among CEOs at the world’s 2,500 largest companies rose to a record high of 17.5% in 2018 — 3 percentage points higher than the 14.5% rate in 2017 and above what has been the norm for the last decade.

  • Slow progress for women

The share of incoming women CEOs was 4.9% in 2018. This is down slightly from the all-time high of 6% in 2017, but it continues an upward trend from the low point of 1% in 2008.

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