In a new study about CEO turnover at energy companies, the rate is at its highest, 19 percent, compared with 14.2 percent for companies overall, according to Booz & Co.’s “12th Annual Global CEO Succession Study.”
The report includes results of 18 interviews with top executives in diverse industries across the globe who offer advice on navigating an executive’s first year at the top. These CEOs share tips such as dealing with the executive team changes early, building trust through transparency and being selective in listening to advice.
Among key findings:
· Turnover was highest in sectors that faced disruptive market forces. Telecoms and utilities followed close behind with turnover rates of 18 and 16 percent. These industries faced disruptive market forces, resulting in more changes at the executive level.
· CEO turnover rate is highest at the largest companies. CEO turnover rate was highest among the top 250 companies by market capitalization — an average of more than 14 percent in 12 years — and nearly 2 percent higher than among companies ranked 251-2,500 by market capitalization between 2000 and 2011.
· Insiders continue to bring higher returns. Between 2009 and 2011, outgoing insider CEOs — those who had risen up through the ranks at the same company — delivered a 4.4 percent annual shareholder return above local market indices on average compared with just a 0.5 percent return from outsiders.
· Appointment of outsider CEOs remains high. In 2011, 22 percent of new CEOs came from outside their organizations. This is consistent with 2010 and 2009 findings but is significantly more than the 14 percent of outsiders appointed in 2007. The rate of outside CEOs in North America was 22 percent in 2011. In western Europe the rate rose to 31 percent in 2011, up from 24 percent in 2010 and 14 percent in 2007.
· The chairman-CEO relationship evolves. In North America, 37 percent of outgoing CEOs were appointed chairman of the board to act as a guide to the new CEO in 2011—a recognition of the pressures facing new chief executives. In Japan, the practice is more frequent; 63 percent of companies appointed the outgoing CEO as chairman; in Europe, only 17 percent of companies did.
· Joint chairman–CEO appointments continue to decline overall, despite a slight rise in 2011. Even with 2011’s slight increase, the practice of a combined chairman-CEO appointment has declined during the past 12 years from 34 percent in 2000 to 14 percent in 2011 globally, on average. The declining frequency of combined appointments was most pronounced in Europe, where they fell from 53 percent in 2000 to just 17 percent in 2011.