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The average tenure of outgoing lead executives was slightly less than seven years

Revolving doors are spinning as boards seek level heads during the COVID crisis.


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Companies worldwide have been in lockdown for the past four months, leaving banks of desks empty while staff work remotely. But one area has seen a flurry of activity: The corner office.

This year has seen a spate of changes in boardrooms worldwide, as companies come under pressure from investors to shuffle their executive teams to steer them through the coronavirus crisis.

The trend is most pronounced in the U.S., where companies have experienced higher levels of executive departures than their counterparts in both the U.K. and Europe, according to new research.

SquareWell, a shareholder advisory firm, tracked changes across companies listed on the major European, U.K., and U.S. indexes over the period January 1 2019 to June 30 2020.

It found that 66% of those executives quit, while just 7% were formally dismissed from their posts. Almost a third (29%) were ousted from their roles because of poor performance, a scandal or strategic disagreement.

Read: CEO exodus hits record as BHP boss jumps ship

Analysts, headhunters and investors have highlighted several reasons for this, including pressure from shareholders frustrated with underperformance and the need for better governance during the crisis, while other departures have taken place as executives reach the end of their tenures.

“These are truly unprecedented times with the stress of a more typical economic and debt cycle being amplified by an extraordinary global pandemic, the structural impact of major disruption across industries and ever increasing hyperconnectivity,” said Susie Cummings, founder of Nurole, the global headhunting platform.

Cummings added that the resulting surfeit of data and shortage of patience is making shareholders more demanding and fueling executive burnout faster.

Read: Boardroom shuffles become latest coping mechanism for companies battling COVID-19 fallout

Some departures have been accelerated by the pandemic. In May, Royal Mail RMG, +2.90%  abruptly replaced CEO Rico Back after less than two years in the job, after clashes with unions over a £1.8 billion restructuring plan aimed at turning around the struggling postal delivery company.

SquareWell’s report showed that 40% of those executives dismissed during the period had recorded negative share price performance during their tenure. Under Back’s leadership, for example, shares in Royal Mail RMG, +2.90%  fell to their lowest level since the business was privatized with a market value of £3.3 billion. At close of trading in London on Friday, the business was valued at £1.8 billion.

In July, cosmetics maker Coty COTY, +6.07%  named former L’Oréal executive Sue Nabi as CEO — its fourth boss in four years. Coty’s shares have lost more than 60% in value this year.

Some companies have changed power-sharing agreements to allow for clear decision-making during the crisis. In April, Europe’s largest software group SAP SAP, +0.97%  said it had abandoned its dual-chief-executive structure to provide clarity in the face of business challenges posed by the COVID-19 pandemic. Co-CEO Jennifer Morgan, who was appointed to the role alongside Christian Klein in October 2019, left the company at the end of April. Morgan was the first female CEO of Germany’s blue-chip DAX index.

Russ Mould, investment director at AJ Bell, said the figure for CEO turnover is the highest this century and beats the peak of 17 seen in 2007 and 2013 (16 changed in 2000), while 18 CFO changes trails 2014, among the past two decades.

However, he noted that the pace of change in the FTSE 100, and seemingly the U.S., appears to have slowed during the pandemic. “Investors will be looking for executives to show that shareholders and stakeholders ‘are all in this together’ and having someone walk out on you during a time of great uncertainty — when experience, steady hands and cool heads are needed — would be far from ideal,” Mould said.

He noted that Willie Walsh had deferred his retirement from British Airways’ owner IAG IAG, +2.78%  by a few months, to help as it struggles to cope with the unprecedented travel slump.

Only 12% of those landing CEO jobs have similar experience at other listed companies, according to SquareWell. These include Björn Rosengren, who joined Swiss manufacturer ABB ABBN, +0.96% in February, having been CEO at Swedish metal-cutting tools maker Sandvik SAND, +1.47% . Wells Fargo WFC, +0.22% ,  the U.S. banking giant, opted for Charles Scharf as its CEO in September 2019, given his prior experience at the helm of BNY Mellon BK, +0.73% .

The majority (38%) of CEOs appointed were heads of divisions or regions in their previous companies, according to SquareWell.

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The report shows women are entering the boardroom at a higher rate than those leaving, accounting for 11% of new top executive appointments since 1 January 2019, compared with 4% of those exiting.

Women who have landed executive leadership positions are more likely to have been sourced from outside an organization, according to SquareWell.

Solvay SOLB, +1.72% , the Belgian chemicals company, appointed Ilham Kadri as its CEO in March 2019, poaching the French-Moroccan from Diversey, a hygiene and cleaning products specialist, while Swedish communications firm Telia Company TELIA, +0.99%  hired Allison Kirkby as its CEO from Danish rival TDC Group.