UK leads rise in CEO departures

Chief executive departures from companies in leading equities indices rose sharply last year, led by high turnover at UK-listed companies where exits from the top more than doubled.

According to research by Russell Reynolds Associates, 175 chief executives stepped down across the world’s top public companies in 2022, up from 133 the previous year and a five-year high.

London-listed companies accounted for one in five departures, the research found, with 38 FTSE 350 chief executives stepping down in 2022, more than double the 18 exits of the previous year.

“UK companies have experienced a turbulent few years, with the economy recovering more slowly from the pandemic than others in the G7 and the nation having faced additional challenges from supply chain issues created by Brexit,” said Luke Meynell, managing director at Russell Reynolds Associates.

Leadership changes in the US and Australia also contributed to the global trend, with a rise in CEO turnover in both the S&P 500 and ASX 200.

The acceleration comes after bosses led businesses through challenges including the Covid-19 pandemic and the war in Ukraine, prompting some to stay in their roles for longer than they had expected in an effort to ensure stability.

“This bottleneck is now broken wide open, and a number of CEOs are stepping down, following three years of chronic burnout,” said the researchers.

Within the UK, the number of chief executive departures among FTSE 100 companies rose 63 per cent to 13, while exits among mid-cap FTSE 250 companies were up 150 per cent to 25.

In Europe, the 10 chief executive departures at Euronext 100 companies last year marked a 50 per cent fall from the previous year. There were 22 such exits among Japan’s Nikkei 225 companies, two less than in 2021.

Healthcare and pharmaceuticals companies experienced the biggest leap in leadership change last year, with an almost threefold rise to 14 departures as companies looked to secure pandemic-related successes and react to supply-chain pressures.

Eight chief executives have already left their jobs at UK-listed companies in the first three months of the year, the research found, slightly up on the seven departures recorded over the same period last year.

Meynell said chief executives were facing an increasing number of challenges, including the need to achieve net zero targets and tackle supply chain issues in an inflationary and uncertain economic environment.

“Accordingly, boards worldwide will be considering carefully whether they have the right person in place at the top,” he said.