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CEOs Continue To Head For The Exits At A Record Rate


Image via Michael Jasmund on Unsplash

What do Disney, Mastercard, MGM and Salesforce have in common? Each saw their CEOs unexpectedly step aside this week. Iger expressed the sentiment many CEOs seem to be feeling as of late, saying "I don’t want to run the company anymore." 


CEO departures have become increasingly prevalent over the last several years. 2019 saw a record 1,640 CEOs depart U.S. businesses, according to Challenger, Gray, & Christmas. The number of CEO departures shattered the previous record of 1,484 from 2008, during the height of the financial crisis. Challenger, Gray, & Christmas says the number of CEO departures has steadily been increasing since August 2008. 


"Following the #MeToo movement, companies were determined to hold CEOs accountable for lapses in judgement pertaining to professional and personal conduct, creating higher ethical standards at the C-level," said Challenger, Gray, & Christmas. "What may have gone unrecognized or was downplayed in the past was not overlooked by boards, shareholders, or the general public in 2019."


If you thought that it couldn't possibly get any worse for CEO departures following last year, you are mistaken. January had the most CEO departures of any month on record since Challenger, Gray, & Christmas began tracking the data in 2002. January saw 219 CEOs jump ship, a remarkable 27% higher than the previous single-month record of 172 from October of 2019. 38 of the CEOs that left last month were from public companies. 


Challenger, Gray, & Christmas revealed companies are increasingly looking beyond internal candidates for replacements. In 2019, 784 replacement CEOs came from outside of the company, while 620 were internal replacements. The trend continued in January with 107 of the 198 replacement CEOs coming from outside of the company. 


"This continues the trend from last year which saw companies hiring external candidates versus grooming someone from within," Challenger, Gray, & Christmas said.


So why are so many CEOs leaving all of a sudden? Various reasons can explain the departures such as normal succession plans, misconduct—personal or professional, or the company may just want a fresh face to take the helm. 


Another explanation, for those CEOs who are willingly stepping down, could be that they don't want to be the fall person when things head south. With the bull market more than ten years old, many CEOs who are willingly stepping down may view it as an opportune time to hand over the reigns and protect their legacy.


With the bull market's resiliency being tested this week and risks to the global economy seemingly increasing, it appears likely that this trend will continue for the foreseeable future. For CEOs who have had a successful run, their best option may be to just walk away if things are getting worse before they catch the blame.


Leftover Crumbs

  • Another miserable day on Wall Street. Stocks continued their plunge, with the Dow Jones Industrial Average plunging 1,190.95 points, its largest single-day point loss in history. The Dow had its worst day since February 2018, while the S&P 500 and Nasdaq had their worst day since August 2011. All three indices have now entered a correction, meaning they are -10% from their recent 52-week highs. The Dow and S&P 500 are on track for their worst week since 2008, during the height of the financial crisis.

  • They continue to battle each other. Market Crumbs often covers the battle going on between Amazon and Walmart, which is increasingly using robots and is even gaining ground on Amazon among consumers. Now, Walmart is going after Amazon where it really hurts—Amazon Prime. According to Recode, Walmart is set to unveil a competitor called Walmart+ that it believes offers perks that Amazon cannot match. Some of the perks that could be included are discounts on prescription drugs at Walmart pharmacies, fuel at Walmart gas stations, ordering through text message and a Scan & Go service, similar to what Amazon just revealed. Walmart confirmed Walmart+ is in development but declined to provide additional details.

  • Unlimited coffee. Panera Bread is launching an unlimited coffee offer for $8.99 per month, believed to be the first of its type for a major restaurant. Breakfast has become increasingly competitive among quick service restaurants as they try to find a new revenue stream as consumers seek healthier alternatives. "We are disrupting the industry," Panera CEO Niren Chaudhary said. "We don’t think this has been done by anybody in this fashion ever before."

  • Tell us how you really feel. Reddit CEO Steve Huffman didn't hold back his true feelings about TikTok, which he referred to as "fundamentally parasitic," during a panel discussion this week. "Maybe I’m going to regret this, but I can’t even get to that level of thinking with them," Huffman said. "Because I look at that app as so fundamentally parasitic, that it’s always listening, the fingerprinting technology they use is truly terrifying, and I could not bring myself to install an app like that on my phone." He didn't stop there, saying "I actively tell people, ‘Don’t install that spyware on your phone.'"

  • They have to pay for that music. Peloton Interactive has settled a lawsuit brought by the National Music Publishers’ Association alleging the fitness company infringed on its copyrights by not having licenses to stream more than 2,400 of its songs. Terms of the settlement were not disclosed, but the National Music Publishers’ Association had initially sought more than $300 million in damages.