New York, NY, April 16, 2013—Leading global management consulting firm Booz & Company today announced the results of this year’s Chief Executive Study, finding the highest share ever of planned CEO successions.
“During the economic crisis, boards took a reactive approach to CEO turnover and postponed CEO transitions. Now they are actively planning CEO successions—companies are looking to build on the stability of a stronger economy and move forward with needed changes,” said Gary L. Neilson, Booz & Company senior partner and coauthor of the study. “Planned turnovers are at the highest rate ever, and insider CEOs make up the majority of new CEOs, indicating companies are taking a more thoughtful approach to ensure the right leaders are in place.”
The annual study of CEO changes at the largest 2,500 public companies in the world, revealed that the CEO turnover rate in 2012 was 15 percent—the second-highest since 2000, lower only than in 2005. Furthermore, companies are actively planning their CEO successions: The share of planned turnovers, at 72 percent of all turnover events, is the highest in the 13-year history of the study, indicating that companies are seeking to build on the leadership stability most have enjoyed with the improved economy.
The Booz & Company study examined the rate of, reason for, and geographic and industry distribution of chief executive changes among the world’s 2,500 largest public companies. This year’s report, “Time for New CEOs: The 2012 Chief Executive Study” focused particularly on who the new leaders are and where they came from.
“When hiring new CEOs with global work experience, Western European companies stood out in 2012, with 60 percent hiring CEOs who have experience in regions outside their company’s headquarters. In addition, 67 percent of newcomer CEOs who are Western Europeans had global working experience,” said Per-Ola Karlsson, Booz & Company senior partner and coauthor of the study. “It’s interesting to note, Western Europe is the only region that supplied new CEOs to all other regions.”
Companies in Brazil, Russia, and India had the highest increase in turnover rates in 2012.
Most new CEOs don’t have MBAs.
Ken Favaro, Booz & Company senior partner and coauthor of the study, added, “The path to becoming CEO doesn’t just involve checking off boxes. As is evident from our study, incoming CEOs aren’t required to earn advanced degrees or gain global experience. Becoming a CEO is more about taking the time to develop the skills needed to grow a company and lead it well into the future.”
The full report can be downloaded by visiting the Booz & Company website www.booz.com/chiefexecutivestudy.
About the Booz & Company 2012 Chief Executive Study
This year’s Chief Executive Study identified the world’s 2,500 largest public companies, defined by their market capitalization according to Bloomberg on January 1, 2012. Our research team members then identified the subset of those companies that had replaced their chief executive, and cross-checked the data using a wide variety of printed and electronic sources in many languages. We also used Bloomberg to determine which companies had been acquired or merged in 2012.
We then further investigated each company that appeared to have changed its CEO for confirmation that a change had occurred in 2012, and sought out additional details—title, tenure, chairmanship, nationality, professional experience, and so on—on both the outgoing and incoming chief executives, as well as any interim chief executives.
We accepted the information provided by the companies themselves on most data elements, except the reason for the succession. Booz & Company consultants worldwide separately validated each succession event as part of the effort to learn the reason for specific CEO changes in their region.
To distinguish between mature and emerging economies, Booz & Company followed the United Nations Development Programme 2012 ranking.
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