CEO departures surge to 134 in January – report

CHICAGO – “The volatility roiling the economy as 2008 begins appears to be spreading to the chief executive officer suite,” outplacement consultancy Challenger, Gray & Christmas Inc. said in a report today.
CEO turnover nationwide increased last month to an eight-month high of 134, an increase of 57.6 percent from December’s 85 announced departures and 17.5 percent from January 2007’s 114.
The CEOs whose departures were announced in January had an average age of 59.6 years, compared with December’s 61.2 and the year-ago 53.8. They had an average tenure of 6.7 years, down from December’s 7.4 years and January 2006’s 9.0 years.
Last month’s total included 35 CEO retirements. Another 28 chief executives stepped down, with 19 of them remaining active as board members or chairmen. Ten left to accept a new position in another company; nine had been serving for an interim period; two lost their places due to company acquisitions; one left citing health reasons; four were fired; and one was eliminated due to the credit collapse.
Forty-four of January’s departing chief executives either “resigned or were forced to resign, including six CEOs who were ousted as their companies struggle with weak sales and restructuring costs in a worsening economy,” the Challenger report said. Those six included William Hunt, of State Street Corp. in Massachusetts, ousted after the company had to set aside hundreds of millions of dollars “to cover … investments in subprime mortgages,” the report said.
“As companies try to survive this economic slowdown and possible recession, CEOs are going to be under heightened scrutiny,” John Challenger, CEO of Challenger, Gray & Christmas, said in a statement this morning. “Companies are turning to layoffs, plant closings, outsourcing and other cost-cutting measures to keep their companies in the black – but eventually, all eyes turn to the head of the company. A change in leadership is sometimes the best option.”
He cited the example of Starbucks Corp., whose board reacted to slumping sales by ousting Jim Donald and bringing back former CEO and Chairman Howard Schultz to help the chain compete with lower-cost rivals such as Dunkin’ Donuts.
“With the decrease in consumer spending, we may see more retailers begin to change their business models,” Challenger said. “CEOs will need to step up and reshape their brands in order to appeal to consumers.”
The health care industry – an historic leader in CEO turnover, averaging about 19 per month for the past two years – again claimed the most chief executives, with 19 losses last month. They included Bausch & Lomb Inc.’s Ronald Zarella, who retired after leading the company since 2001.
The technology sector – telecommunications, e-commerce and electronics – was close behind with 18 CEO departures. Notable among them was Meg Whitman at eBay, one of only a dozen women serving as chief executives at Fortune 500 companies.
“We may see other notable CEO exits from the tech sector in the coming months, especially in light of Microsoft’s bid for Yahoo,” Challenger said. But, he added: “With the success Ms. Whitman brought to eBay, we may also see an influx of women reaching the top post.” In fact, the outplacement firm said, of the 101 CEO replacements recorded last month, 11.8 percent were women and 66 percent of those women were replacing men. But that didn’t result in any net gain; including Whitman, 14 percent of CEOs leaving their positions in January also were women.
The government-nonprofit sector saw 16 CEO departures last month; the financial and insurance sectors, 13; the retail sector,10; the services sector, 9; pharmaceuticals, 8; media, 7; entertainment and leisure, 6; food and industrial goods, 5 each; chemicals and energy, 4 each; commodities, transportation and utilities, 2 each; and the aerospace, automotive and construction sectors, 1 each.
Challenger, Gray & Christmas Inc., an international outplacement consulting firm, is also the producer of a monthly job-cuts report based on corporate layoff announcements nationwide. To learn more, visit www.challengergray.com.

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