The number of CEOs forced out of their jobs at the world’s top 2,500 companies has dropped significantly, while “planned succession” reached record levels in 2014, according to consultants.
Writing for the Harvard Business Review, Per-Ola Karlsson, a partner at Strategy&, part of the PwC network, said: “The fact that succession rates are more universally aligned is a sign of continued globalisation. Governance practices have been converging steadily since 2000, capital has become increasingly mobile, and senior leaders at the largest corporations find themselves, more and more, facing the same kinds of challenges and opportunities no matter where they are headquartered or where they do business.”
Karlsson said that between 2000 and 2008 the average number of planned successions was 68%. In 2014 that figure rose to 86%. Forced exits stood at 37% in 2004, while last year the number was 14%.
“One reason for this improvement may be the increased focus on corporate governance over the 2000–2014 period, starting with the enactment of the Sarbanes-Oxley Act in the US in 2002, as well as significant corporate governance reforms in the UK and the European Union,” said Karlsson.
He added: “At the same time, increased regulation has also heightened compliance risks for companies and their directors, underscoring their duty to choose senior leaders carefully. The rise of “activist” investors, which challenge boards at companies where shareholder returns are lagging, may also be a factor.”