Former Starbucks CEO Laxman Narasimhan / World Economic Forum / Benedikt von Loebell
This year has seen significant changes in CEO turnover. In the first quarter alone of 2024, outplacement and career transitioning firm Challenger, Gray & Christmas reported that 622 chief executives announced their resignations. This represents a 50% increase compared to the first quarter of 2023, which was already a record year for CEO exits.
The surge in departures seen earlier this year can be attributed to the evolving business landscape, retirement of Baby Boomers and increased pressure on CEOs to navigate complex issues, including inflation, supply chain disruptions, and environmental, social and governance concerns.
The median tenure of CEOs at S&P 500 companies has been on the decline, falling from six years in 2013 to 4.8 years in 2022, a 20% decrease over the period, according to executive consultancy Equilar. This shorter tenure reflects the increasing challenges and pressures faced by executive leaders in the current business environment.
“C-Level leaders have had an incredibly challenging few years, and are transitioning out of their roles, whether for new opportunities or to get fresh starts elsewhere,” Andrew Challenger, senior vice president at Challenger, Gray & Christmas, stated in his firm’s report.
“Rapid technological advancements, in addition to an election year, may make it a palatable time to make changes at the top,” he added.
Although there was a slight increase in the percentage of women appointed as chief executives in the second quarter of 2024, the rate of new women CEOs has fallen year-over-year to 27.2% in March 2024, down from 30% in March 2023.
High-Profile CEOs Shown The Door This Year
In the first half of 2024, there have been some notable CEO departures, including:
Laxman Narasimhan, Starbucks
Starbucks has recently undergone a significant leadership change. Laxman Narasimhan, who had been serving as CEO for just over a year, has unexpectedly stepped down from his role effective immediately. The company last week appointed Brian Niccol, the current chief executive of Chipotle, as its new chairman and CEO, with his tenure set to begin on September 9.
This sudden announcement comes amid reports of Starbucks facing challenges, including falling sales and declining stock prices. While no specific reason has been given for Narasimhan’s departure, the coffee chain has been under pressure from activist investors, particularly Elliott Investment Management, that have been pushing for measures to boost Starbucks’ share price.
“In the face of some challenging headwinds, Laxman has been laser focused on improving the business to meet the needs of our customers and partners,” said Mellody Hobson, the new lead independent director at Starbuck, in a statement. “We all wish him the very best and know he will do great things in the future.”
The appointment of Niccol is seen as a strategic move, given his successful track record at Chipotle. Starbucks stated that he has established “new standards in the industry and fostered considerable growth and value creation,” highlighting that the fast-casual Mexican restaurant’s revenue has increased by nearly 800% during his reign.
This leadership transition marks a critical juncture for Starbucks as it seeks to address its recent problems and restore growth. The market responded positively to this news, with Starbucks stock surging over 24% following the announcement.
Dave Calhoun, Boeing
In a letter to employees in March, Boeing CEO Dave Calhoun announced his departure from the aerospace company, which will take place at the end of 2024.
“I originally agreed to take on the role of CEO of Boeing at the board’s request, stepping down as board chair in the process, because of the unprecedented circumstances the company was facing at that time,” Calhoun stated in the memo.
“As you all know, the Alaska Airlines Flight 1282 accident was a watershed moment for Boeing. We must continue to respond to this accident with humility and complete transparency. We also must inculcate a total commitment to safety and quality at every level of our company. The eyes of the world are on us, and I know we will come through this moment a better company, building on all the learnings we accumulated as we worked together to rebuild Boeing over the last number of years,” the CEO said, acknowledging the aircraft manufacturer’s recent turmoil surrounding its 737 Max planes.
On January 5, a scheduled flight from Portland, Oregon to Ontario, California, suffered an unexpected structural failure when a door plug, which is used to seal an optional emergency exit, suddenly detached from the fuselage. This event resulted in a rapid loss of cabin pressure, known as an uncontrolled decompression.
The aircraft made an emergency landing back in Portland. All 171 passengers and six crew members were unharmed in the incident, although three individuals sustained minor injuries.
The aerospace giant has been under heightened scrutiny from both regulators and customers regarding issues related to quality control following two Boeing 737 MAX crashes that killed 346 people in less than five months in October 2018 and March 2019, under former CEO Dennis Muilenburg’s tenure.
In an interview with CNBC in March, Calhoun stated that the choice to resign was entirely his own.
Bob Bakish, Paramount Global
Bob Bakish, the long-serving CEO of Paramount Global, stepped down from his position in April amid ongoing merger negotiations with Skydance Media, and financial challenges. Bakish, who had been with Paramount and its predecessor Viacom since 1997, was replaced by an interim “Office of the CEO” consisting of three executives: Brian Robbins, George Cheeks and Chris McCarthy.
The leadership change came as the company grappled with declining cable audiences, streaming competition and pressure to enhance shareholder value. Additionally, Bakish reportedly opposed the prospective merger with Skydance, according to the Los Angeles Times.
“The Board and I thank Bob for his many contributions over his long career, including in the formation of the combined company as well as his successful efforts to rebuild the great culture Paramount has long been known for,” Shari Redstone, chair of Paramount Global’s board, stated in the press release. “We wish him all the best.”
The deal with Skydance was announced on July 7, but is still subject to regulatory approval and other customary closing conditions.
Stephen Scherr, Hertz
Stephen Scherr resigned as CEO of Hertz in March. His farewell followed significant headwinds faced by the company, particularly a costly pivot away from electric vehicles that resulted in the sale of approximately 20,000 EVs, or one-third of its fleet.
This strategic shift was prompted by rising repair costs and low demand for EV rentals, leading to Hertz’s largest quarterly loss in three years.
Scherr, who joined the rental car company during its recovery from bankruptcy in 2020, was succeeded by Gil West, the former COO of Delta Airlines, as Hertz seeks to stabilize its operations and refocus its strategy.
“We are thrilled to have Gil join Hertz as Chief Executive Officer,” said Tom Wagner, vice chair of the Hertz board of directors, in a statement. “Gil’s experience as a successful leader in operationally intensive businesses will further strengthen the Company’s world class team of over 27,000 global employees who work tirelessly to deliver outstanding service to customers daily. We are appreciative of Stephen’s contribution over the last two years, including on a number of key strategic initiatives, which Gil will now lead in their continued execution.”
CEOs Being Held Accountable
It’s important to note that CEO departures don’t always indicate misconduct or poor performance. Sometimes they reflect strategic shifts or mutual decisions between the board and the executive. However, when CEOs are held accountable for ethical violations or poor performance, it can send a powerful message about corporate governance and responsibility.
In recent years, we’ve seen high-profile cases like the ousting of Sam Altman from OpenAI—though he was quickly reinstated—and the departure of Bob Chapek from Disney, which highlight how even top executives can face consequences for their actions or business performance.
Companies and boards are increasingly aware of the need for ethical leadership and strong performance, especially in the face of public scrutiny and shareholder expectations. This ongoing scrutiny serves as a reminder that leadership positions, even at the highest levels, are not immune to consequences, which can provide some reassurance to workers and the general public about corporate accountability.
Source: Forbes
