CEO Succession 2010
  • CEO Turnover in the UK Rises Back to Global Financial Crisis Levels, While CEO Turnover Across the Globe falls.
  • New Analysis of Corporate Management Models Shows CEOs More Deeply Involved with Operations See Shorter Tenures

London, 17th May, 2011 – In 2010, CEO turnover in the UK saw a sharp increase back to the same level last seen in the midst of the global financial crisis (14.3%), while in contrast CEO succession rates across the globe fell to 11.6%, the lowest level in seven years, according to Booz & Company’s 11th annual CEO Succession Study. The Consumer Staples industry in the UK was hardest hit, reaching a record eight year high of 26.1% compared with just 7.7% globally.

Other UK industries with the highest CEO turnover rates in 2010 are:

  • Financial service, rising to 12% compared to just 2.1% globally.
  • Energy (18.2%), down 5.8% from 2009 but still higher than global levels (16.3%).
  • Industrials (17.4%), rising 6.8% compared with 2009 and significantly higher than the global level of 0.5%.
  • Telecommunication Services (16.7%), increased 100% with no recorded movement in 2009, compared with 13.9% globally.
  • Consumer Discretionary (14.3%), holding steady at the same figure from 2009, significantly higher than just 6.9% globally.

Overall, the rate of CEOs forced from office fell to 2.2% globally in 2010, declining 36% from 2009 and representing the lowest rate of chief executive terminations since 2001. Planned as opposed to forced or merger-driven departures, declined by 1.4% to 7.7%. Last year, overall succession rates outside Europe, which also include merger-driven departures, held stable in North America (11.1%) and increased in Japan (18.9%), while falling in the rest of Asia (also 10.2%).

Booz & Company’s study of worldwide CEO succession patterns examines the degree, nature and geographic distribution of chief executive changes among the world’s 2,500 largest public companies. This year’s report, “CEO Succession 2010: The Four Types of CEOs,” focuses on the role of the CEO and core senior management team, examining how they engage with the businesses they lead and the resulting effect on tenure and turnover. The report will be published in the Summer 2011 edition of strategy+business, Booz & Company’s quarterly thought leadership magazine. Among the report’s key findings:

  • “Insider CEOs” rule the roost. Companies that promote their CEOs from within have historically enjoyed superior returns for their shareholders, and last year the gap widened as companies with insider CEOs generated total shareholder returns on a regionally adjusted basis of 4.6%, compared with 0.1% produced by outsiders. Insiders also left office after an average 7.1 years, versus 4.3 years for outsiders. Among last year’s 291 outgoing CEOs, 81% were insiders when they took the chief position.
  • CEO tenures have shortened over the past 10 years. Overall, CEO tenures were on average 18 months shorter in 2010 (6.6 years) compared to a decade ago (8.1 years). And the length of planned tenures, in which the CEO departs on a date prearranged in agreement with the board, has dropped by 30% over the last 10 years, from 10 to seven years.

This year’s report analyses four corporate management models, defined by the way the corporate core – made up of the CEO, the core senior management team and key support services—engages with the rest of the business:

  • Holding company. With a minimal degree of operational management, interacts like a portfolio manager and is interested in results, not how the results are generated.
  • Strategic management company. Offers strategic guidance to its local businesses, but not the supervision of operational decision-making and finds value in linkages and synergies between loosely related business units.
  • Active management company. Shares accountability with the business units for major operational decisions and adds value through close guidance and expertise.
  • Operationally involved company. Sets the strategy for the company as a whole and gets involved in operational decision making for most or all business units.

These four corporate management models clearly influence the CEO’s experience in office, according to Booz & Company.

  • Departing CEOs at operationally involved companies have median tenures of 4.9 years, nearly 25% shorter than those from highly diversified holding companies (median 6.5 years). Strategic management and active management companies have median tenures of 5.3 and 5.0 years, respectively.
  • Operationally involved CEOs are more likely to depart in the first four years of their stint than holding company CEOs, at a rate of 36% and 17%, respectively.
  • It’s even tougher for operational CEOs who came into their companies as outsiders: they have a median tenure on departure of just 3.3 years, compared with 5.0 years for insiders.
  • Most (57%) CEO dismissals at operationally involved companies are a result of disagreements with the board – far more than at any other type of company.
  • Merger and acquisition is the most prevalent reason for successions in active management and operational involvement companies, accounting for 48% and 52% of turnovers in those companies, respectively.

”Incoming CEOs need to recognize that if they come in from the outside or run an operationally involved company, the time they have to make an impact is much shorter than for other CEOs,” said Richard Rawlinson, Partner at Booz & Company. “Understanding the patterns in each corporate core model can help a new CEO prioritise for early success, and perhaps prevent an unplanned exit.”


This 2010 CEO Succession study identified the world’s largest 2,500 largest public companies, defined by their market capitalizations (from Bloomberg) on January 1, 2010. To identify companies among the top 2,500 that had experienced a chief executive succession event, Booz & Company cross-checked data across a wide variety of printed and electronic multi-language sources. Additionally, the company conducted electronic searches for announcements of retirements or new appointments of chief executives, presidents, managing directors and chairmen during calendar year 2010. For a listing of companies that had been acquired or merged in 2010, Booz & Company used Bloomberg. Booz & Company also conducted supplemental research for regional CEO changes not identified by other sources. Total shareholder return was sourced from Bloomberg and includes reinvestment of dividends (if any). Total shareholder return data were then regionally market-adjusted and annualized. To distinguish between mature and emerging companies, Booz & Company followed the United Nations Development Program 2010 ranking.