"1,800 Employees Quit This Year"... US CEO Turnover Rate Hits Record High

1824 CEOs Resigned Through October This Year
Increasing Business Environment Complexity, Rising CEO Performance Pressure

This year, the resignation rate of CEOs at American companies has reached an all-time high.

According to Challenger Gray & Christmas (CG&C), a global reemployment consulting firm, as of October this year, 1,824 CEOs have left their companies in the U.S., a 19% increase compared to the same period last year, marking the highest number since the firm began tracking CEO turnover in 2002.

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David Kass, a finance professor at the University of Maryland, explained in an interview with Yahoo Finance, "As corporate boards become increasingly independent, they are holding CEOs accountable for poor performance in both earnings and stock prices," adding, "This pressure on performance is shortening the average tenure of CEOs."

Professor Kass particularly noted that the U.S. stock market boom over the past two years likely added pressure on CEOs. With the S&P 500 index rising about 20% last year and currently up around 26% year-to-date, some large-cap stocks, including the 'Magnificent 7,' are raising expectations from boards and shareholders for other CEOs. CEOs of companies such as Starbucks, which replaced its leader after 17 months in August, Nike, Stellantis, and Intel have all recently stepped down amid poor stock performance and earnings.

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The increasingly harsh business environment surrounding CEOs was also cited as a cause for frequent CEO dismissals. Consulting firm Russell Reynolds stated, "The rapid pace of technological innovation, geopolitical crises, and social issues have complicated the macro business environment," diagnosing that the shortened CEO turnover cycle reflects a strong desire for leaders capable of navigating these challenges. Additionally, rising borrowing costs due to high interest rates have constrained corporate investment, posing further obstacles for CEOs.

The situation facing new CEOs is expected to be equally challenging. Like Brian Niccol, CEO of Starbucks, who stepped in as a 'rescuer' for a company in crisis, they must deliver results commensurate with their high salaries. Michael Fa, senior market strategist at HighTower Advisors, argued, "If a company is sinking instead of riding the upward tide like others, the board must take corrective action," adding, "It may sound unfair, but whether the CEO is actually at fault is irrelevant. If there is no clear plan to turn things around, they must be held accountable."