According to a report from the American human resources consulting company “Challenger, Gray & Christmas, Inc.,” in 2024, the resignation rate of Chief Executive Officers (CEOs) in American companies has reached a record high, with a growing trend towards appointing interim leaders as replacements.
As of November, a total of 1,991 CEOs have resigned this year, surpassing the historical record of 1,914 CEO resignations in 2023. This represents a 16% increase from the 1,710 resignations during the same period last year.
With the surge in executive resignations, the practice of appointing interim leaders in companies is becoming more common. Last year, temporary CEO replacements accounted for 7%, which has now risen to 13% this year.
Andrew Challenger, Senior Vice President of the company, stated, “The current environment is fraught with uncertainties, and companies are turning to appointing interim leaders as a response. This serves as a trial run to see how they handle the current challenges. If things don’t go as expected, replacing the interim leader causes less disruption, benefiting the company, its employees, analysts, and shareholders.”
So far, the industries with the highest CEO resignations are government and non-profit organizations, totaling 438 people, followed by sectors such as medical products, technology, entertainment, leisure, finance, services, and hospitals.
In terms of states, California leads with 223 CEO resignations, followed by New York, Texas, and Florida.
The main reasons given by CEOs for their resignations include retirement, seeking new opportunities, or transitioning to different positions within the company.
Challenger mentioned in September that economic changes were a key factor behind the rising resignation numbers. Economic uncertainties often impact leadership decisions. Several indicators suggest that the labor market is not only slowing down but the overall market may also be facing downside risks. With technological advancements, companies are cutting costs across the board and shifting towards new processes and operations, sometimes even new products. This presents an ideal opportunity for new leaders to step in.
Coinciding with the release of the company’s report, Pat Gelsinger, the CEO of Intel, stepped down earlier this month, ending his four-year tenure. During his term, Intel experienced several quarters of declining revenue and net losses, failing to make significant strides in the AI chip sector. Following Gelsinger’s departure, Intel’s stock price soared.
In March, Dave Calhoun, CEO of Boeing, resigned due to the company’s involvement in an aircraft quality scandal. In January, just after a Boeing plane took off, an emergency exit door malfunctioned and fell off, raising concerns about the company’s compliance with safety regulations and stricter government oversight. Apart from Calhoun, two other executives also resigned at that time.
In the same month, Carlos Tavares, CEO of the multinational automotive manufacturer Stellantis, resigned due to poor North American sales figures.
According to a report from the leadership consulting company “Russell Reynolds Associates,” an increasing number of companies are choosing to promote CEOs from within rather than recruiting externally. The report analyzed data from major global stock indices.
The report highlights that out of the 178 CEOs appointed globally in 2023, 77% were internal promotions, reaching a historical high last year.
This trend is driven by various factors, including lower perceived risks and costs associated with internal candidates, as well as the potential to motivate existing employees through such promotions. Boards of directors also aim to convey a message that they have been effectively planning for succession.