Analysis – Most unstable jobs in the American boardroom: CEO
By Svea Herbst-Bayliss and Isla Binnie
NEW YORK (Reuters) – US companies are removing CEOs in the fastest clip in 20 years and data is due to increased scrutiny from shareholders and boards, which reduces their resistance to sub-par returns or whimsical behavior.
At least 41 CEOs have left S&P 500 companies so far this year, according to data from the non-profit executive research group The Conference Board and Data Analytics Company Esgauge.
In the latest example, Consumer Goods Company Procter & Gamble, the maker of Tide Laundry Detergent and praise paper towels, said on Monday that CEO Jon Moeller will be replaced by longtime executive Shailesh Jejurikar. Moeller, who has been CEO since 2021, will become an executive chairman. This will play a strong role in the board of directors that will allow the former chief to retain a strong voice in the company’s problems.
Prior to that, over the past three weeks, Tylenol maker Kemb replaced CEO, with healthcare products distributor Henry Shane saying the CEO will leave at the end of the year.
In the interview, more than 12 executive recruiters, investors, bankers, lawyers and industry advisors have said that this year’s high sales are due to a variety of reasons, some of which have been built from economic and social changes since the Covid-19 pandemic.
High inflation, geopolitical instability and the Trump administration’s trade war complicate the work of CEOs, but the benefits of diversity have made people more independently demanding top job people, these people said.
At the same time, as stock markets set new records but were driven primarily by large-scale technology names, underperformance was given to activist investors, who pushed corporate change from sales of sectors to buying more stocks to bigger shaking, leading to changes in management.
“To fire a CEO has become a referendum on what is perceived as a failed company’s strategy,” says Peter Da Silva Vint, managing partner at consulting firm Jasper Street, working with companies facing pressure from activist investors. “And it’s become a more comfortable mechanism for investors to send messages.”
A November survey led by conference committees found that CEOs of companies delaying their colleagues are at the highest risk of demand from activists, accounting for almost half to 42% of S&P 500 companies that changed leadership in the bottom 25th percentile of 25th percentile for shareholders’ total profit last year.
Taking the case of Kenvue, the board said that after losing 16.5% in shares two years ago from a spin-out from Johnson & Johnson, it will replace CEO Thibaut Mongon, unlocking shareholder value and reaching its full potential. In contrast, the S&P 500 rose 41% since August 2023, when Kenvue became a completely independent company.