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Global CEO turnover at record highs. (Leadership).

As companies set higher standards of performance for CEOs than ever before, CEOs are falling short in record numbers, according to "CEO Succession 2002: Deliver or Depart," the second annual survey of CEO turnover at the world's 2,500 largest publicly traded corporations by management and technology consulting firm Booz Allen Hamilton. And, despite the well-publicized U.S. cases, CEO turnover is accelerating faster in Asia and Europe than in North America, the study found.

Results from the study underscore the growing influence of shareholders and their representatives, corporate directors, the study concludes. "This phenomenon is now fully global, even in regions not burdened by governance scandals," said Charles Lucier, senior vice president emeritus of Booz Allen. "There is no longer any safe haven for chief executives who can't deliver superior results."

Among the findings:

* Involuntary successions in 2002 increased by more than 70 percent over 2001, even thought the total number of CEO changes only rose by 10 percent.

* Of all CEO departures globally in 2002, 39 percent were forced, performance-based changes, compared to 35 percent in 2001.

* CEO turnover in Europe and the Asia/Pacific region continues to rise. CEO succession is up 192 percent in Europe and 140 percent in Asia/Pacific since 1995, the study's benchmark year; in North America, succession events increased on 2 percent during the same period.

* Regionally, the biggest change occurred in the Asia/Pacific region, accounting for nearly one of every five (19 percent) global succession events, compared with 8 percent in 2001 and 6 percent in 2000. Forced turnover in Asia accounted for 45 percent of all transitions there, up from only 6 percent in 2001.

* North America accounted for 48 percent of all successions worldwide in 2002. That was significantly lower than the 64 percent the region accounted for in 2001.

* Boards are less forgiving, and are judging CEO underperformance more strictly. CEOs who were dismissed in 2002 generated median regionally adjusted shareholder returns 6.2 percentage points lower than those of CEOs who retired voluntarily. It took an 11.9 percent shortfall to prompt a firing in 2001; in 2000, fired CEOs underperformed retiring chiefs by 13.5 percent.
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Publication:Financial Executive
Geographic Code:00WOR
Date:Jul 1, 2003
Words:361
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