Knowledge Center: Article
Chief Executive Officer & Board of Directors
CEO succession trends in 201710/3/2018 The Conference Board and Heidrick & Struggles
In a highly volatile, disruptive world, it has become increasingly critical for companies to put CEO succession planning at the top of the business agenda. The Conference Board’s latest annual report, CEO Succession Practices: 2018 Edition, developed in collaboration with Heidrick & Struggles, analyzes some of the latest trends in CEO succession events of S&P 500 companies.
Among the starkest findings was that, in 2017, CEO tenure at S&P 500 companies reached an all-time high since 2002, at nearly 11 years, and the percentage of CEOs who reached retirement age was also the highest on record, at nearly 17%. This may suggest that 2018 could mark a significant shake-up in leadership at some of the world’s largest companies.
Further, S&P 500 companies are increasingly turning to outside talent for CEO roles, with outside placements jumping to just over 44% in 2017, more than triple the percentage for the previous two years when the proportion of outside appointments was a little over 14%.
Other notable findings include the following:
- While more progress needs to be made in gender diversity in the C-suite, the number of CEO positions held by women in the S&P 500 in 2017 rose to the highest level recorded by The Conference Board, with 27 female chief executives, up from 26 in 2016. The report predicted that if the rate of increase in female representation in the CEO community were to continue at the 2001–2017 pace, there would still be fewer than 100 women CEOs of S&P 500 companies in 2034.
- The retail and wholesale trade sector had the highest rate of CEO turnover, as big-box retailers continue to undergo massive transformation and face shifting consumer demands. Within the retail and wholesale trade sector, the CEO succession rate was 22.7%, more than twice as high as the CEO succession rate at S&P 500 companies overall, at 10.8%.
- Gradual transitions have become more common, with boards choosing to appoint an interim CEO in almost 2 out of 10 CEO successions in 2017. While this practice was previously used in emergency situations, it is now more commonplace.
To learn more about how CEO succession affected various industries, click here.