Strategy& Chief Executive Study highlights CEOs with more diverse experience hired in the UK compared with other global regions

Though there remains a lot to be done to develop female chief executives

London, UK, April 29, 2014 – Global management consulting firm Strategy& – formally Booz & Company and now part of the PwC network – today announced the results of this year’s Chief Executive Study, finding higher rates of industry-swapping and globetrotting CEOs in the UK compared with their global counterparts and lower female representation in chief executive roles in the UK compared with other regions.

Now in its 14th year, the report annually investigates trends in CEO success and successions at the world’s largest 2,500 public companies. This year’s study additionally highlights insights observed from ten years of data compiled on women CEOs.

“In the UK we hire more CEOs who come from different industries and geographies and have a diverse bank of knowledge and experience compared with equivalent chief executives in other global regions. This year’s study also highlights how UK CEOs were twice as likely last year to be forced out of their role than CEOs in the US and Canada, underlining the important differences in corporate governance between the two regions.” said Richard Rawlinson, Partner at Strategy&.

Carolin Oelschlegel, Principal at Strategy&, notes: “This year’s study shows that there were 75% more women CEOs in the in-coming than outgoing classes in total over the past ten years. This is good news but in the UK we need to do more. Last year, we saw only one female chief executive out of the total 40 appointments made in 2013.”

This year’s report highlights the following findings:

  • In 2013, the CEO turnover rate in the UK was 15 percent. While this is down from 2012 (16 percent), it is higher than Western Europe as a region (12.9 percent).
  • 51 percent of incoming CEOs in the UK had worked in other regions, more than the global share at 35 percent. Additionally, only 59 percent of incoming CEOs in the UK have the same nationality as their company headquarters, less than the global share (80 percent).
  • UK companies appointed CEOs with more diverse industry experience. 63 percent of incoming CEOs in the UK last year had joined their current company from a different industry, greater than the global share at 42 percent.
  • Outgoing insider CEOs ¬– people who had been promoted from within the company – in the UK delivered lower returns than outgoing insider CEOs globally.
  • UK CEOs were twice as likely to be forced out of office compared with the US and Canada. Here the number of forced exits sits at 1.6 percent compared with the UK at 4 percent – and more still than CEOs in many emerging markets, despite being traditionally viewed as experiencing greater political or social upheaval.
  • In 2013, the UK’s share of the top 2,500 public companies by market capitalisation increased to 4.6 percent, up 0.7 percentage points from last year.

Women CEOs of the last ten years:

  • The US and Canada have had the highest share of women CEOs in the past decade at 3.2 percent, while those in Japan have had the lowest (0.8 percent).
  • Globally companies in the information technology, consumer staples, and consumer discretionary industries had the highest percentages of women CEOs (3.1 percent, 2.6 percent, and 2.6 percent respectively). The materials industry has had the lowest (0.8 percent).
  • Women CEOs are more often hired from outside the company than male CEOs – in the last decade, insider female chief executive promotions stood at 65 percent compared with male promotions at 78 percent.
  • The UK saw just one female CEO out of the total 40 appointments made in 2013. Globally over the past five years, the share of women in the incoming CEO classes (3.6 percent) was 71 percent higher than in the prior five-year period (2.1 percent). Despite these trends, women made up just 3 percent of the global incoming class in 2013, a 1.3 percentage point drop from 2012.
  • Strategy&’s recent report into the Third Billion ranked the UK as 13th out of 128 countries who invest to develop women in business with Australia, Norway, Sweden and Finland coming in the top three rankings.

The full Chief Executive Study can be downloaded by visiting the Strategy& website

Key global findings

  • Global turnover rates remained stable. In 2013, 14.4 percent of CEOs left office, a typical turnover rate for non-recession years and a small decrease from 2012’s 15 percent. Among regions, the highest turnover rates were in Brazil, Russia, and India (at 21.1 percent). For the third year running, the industry with the highest turnover rate was in telecommunications services (at 22.1 percent).
  • There is an increasing emphasis on planned departures. 70 percent of changes at the top in 2013 were planned (not a result of M&A or of CEOs being forced out), a common level in recent years but nearly 20 percent higher than the average rate of such transitions ten years ago.
  • In direct contrast to the UK, most of the new global CEOs are familiar to the companies that hire them. In 2013 76 percent of incoming CEOs were insiders and 26 percent had worked at only one company during their career. 58 percent joined their company from one in the same industry, 80 percent hailed from the country in which company headquarters were located and 65 percent did not have experience working in a region other than their company’s headquarters region.
  • CEOs who generate the lowest returns to shareholders are more often forced out. Among outgoing CEOs in 2013 who generated the lowest total return to shareholders during their tenure, 32 percent were forced out while only 14 percent among the top quartile of performers were forced out. Companies of the lowest performers more often hire outsiders to replace them (31 percent vs. 23 percent among top-quartile companies).
  • The global share of CEOs appointed with joint CEO/Chairman titles decreased to an all time low of 9%. Where chief executives were appointed with a joint title it was more often after a forced turnover but still rare.

Methodology behind the Strategy& 2013 Chief Executive Study

This study identified the world’s 2,500 largest public companies, defined by their market capitalisation (from Bloomberg) on January 1, 2013. Our research team members then identified the companies among the top 2,500 that had experienced a chief executive succession event and cross-checked data using a wide variety of printed and electronic sources in many languages. For a listing of companies that had been acquired or merged in 2013, we also used Bloomberg. Each company that appeared to have changed its CEO was investigated for confirmation that a change occurred in 2013, and additional details — title, tenure, gender, chairmanship, nationality, professional experience, and so on — were sought for both the outgoing and incoming chief executives (as well as any interim chief executives).

Company-provided information was acceptable for most data elements except the reason for the succession. Outside press reports and other independent sources were used to confirm the reason for an executive’s departure. Finally, Strategy& 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, Strategy& followed the United Nations Development Programme 2013 ranking. Total shareholder return data for a CEO’s tenure was sourced from Bloomberg and includes reinvestment of dividends (if any).

Total shareholder return data was then regionally market-adjusted (measured as the difference between the company’s return and the return of the main regional index over the same time period) and annualised.

Contact Martina Mazzon
Telephone: +44 20 7393 3251
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