Global 500 CEO Departures at 15 Percent and Sweep All Regions

Monday, January 22, 2007 NEW YORK, January 22, 2007 – When it comes to the super class of CEOs in the world’s largest companies, upheaval in the chief executive suite is not in the exclusive domain of one region, according to a new Global 500 CEO Departures™ in-depth analysis by public relations firm Weber Shandwick. Overall, a sizeable 15 percent of the world’s largest companies experienced a chief executive change in 2006 (10 percent in North America, 18 percent in Europe and 16 percent in Asia Pacific). These findings are based on CEO departures at the world’s 500 largest revenue-producing companies and show that disruption in the chief executive suite is clearly a worldwide phenomenon.

On a positive note, the proprietary analysis reveals that the overall departure rate of global 500 CEOs declined from 17 percent in 2005 to 15 percent in 2006 – an 11 percent drop proportionally. On a regional basis, the world’s largest companies headquartered in North America experienced the most marked decline, from 18 percent in 2005 down to 10 percent in 2006. In contrast, the world’s largest company CEOs in Europe saw a modest rise (from 15 percent in 2005 to 18 percent in 2006) while Asia Pacific witnessed no change.

GLOBAL 500 CEO DEPARTURES

	2006 CEO Departures	Percentage of 2006 CEO Departures Within Region	2005 CEO Departures	Percentage of 2005 CEO Departures Within Region
	#	%	#	%
Total	74	15	83	17
North America	18	10	34	18
Europe	33	18	28	15
Asia Pacific	20	16	19	15
Latin America	3	*	2	*

Source: Weber Shandwick Global 500 CEO Departures™ Analysis
* Due to small sample sizes in Latin America, the percentages are not shown.

Weber Shandwick President Andy Polansky says, "Considering that the world’s leading 500 companies are responsible for generating approximately $19 trillion in revenue, quality CEO succession planning, leadership training and board accountability have far-reaching consequences, not only for individual companies but also for members of the worldwide business community.Weber Shandwick has a great deal of experience helping companies navigate communications challenges in an environment that rewards transparency and outreach to key constituencies.  These components are integral to good corporate governance and management practices.”

The analysis revealed other significant shifts in the chief executive suite of the world’s 500 largest companies:

• Country CEO Turnover – The top five countries worldwide experiencing the greatest CEO turnover in 2006 were the United States, Japan, Britain, Germany and

France.  In 2005, the greatest CEO churn worldwide occurred in the United States, Japan, France, Britain and the Netherlands.  In the past year, Germany jumped into the top five.

• Reasons for CEO Departures – In 2006, over one-half (57 percent) of global 500 CEOs retired or left office for reasons such as planned succession, promotion to chairman, political appointment or a new position at another company.  Nearly one-third (31 percent) left against their will and the remainder (12 percent) exited due to mergers, illness, interim positions and corporate governance changes.

• Insider vs. Outsider Turnover – In both 2006 and 2005, insider executives continued to outnumber outsider executives among new CEOs at the world’s largest companies.  In 2006, 65 percent of global CEOs were chosen from inside the company versus 35 percent chosen from outside.  The proportion of insider to outsider executives has remained stable year over year (67 percent and 33 percent in 2005).

• Seasonal CEO Departures – In 2006, global CEOs left their positions in fairly equal proportions each quarter.  In 2005, more of the world’s largest company CEOs departed in the first two quarters versus the last two quarters of the year.

GLOBAL 500 CEO DEPARTURES BY QUARTER

	2006	2005
	%	%
First Quarter	23	31
Second Quarter	23	34
Third Quarter	26	17
Fourth Quarter	28	18

Source: Weber Shandwick Global 500 CEO Departures™ Analysis

“Despite the good news that overall CEO churn among the world’s largest 500 companies appears to be slowing down, uncertainty from CEO change is felt from the boardroom to the mailroom.  Whether CEO departures are due to standard succession planning, mergers, poor financial performance or wrongdoing, boards everywhere must fill the leadership pipeline with the best and the brightest for the challenging times ahead,” said Weber Shandwick’s Chief Reputation Strategist and CEO expert Dr. Leslie Gaines-Ross. 

Global 500 CEO Departures™ Methodology
Weber Shandwick’s Global Departures™ analysis is based on the world’s largest companies by revenue according to Fortune magazine’s Global 500 ranking (July 24, 2006 and July 25, 2005). Fortune calculates revenue using publicly available data based on the companies’ fiscal year ending on or before March 31, 2006. Weber Shandwick divided the global market into four
regions – North America (U.S. and Canada), Europe, Asia Pacific and Latin America (including Mexico).

To track daily CEO turnover, Weber Shandwick used a variety of electronic search engines, such as Factiva, LexisNexis, The Corporate Library’s Board Analyst and company Web sites. After a CEO departure was identified, Weber Shandwick confirmed the departure with the company’s official press release. 

Weber Shandwick also investigated the reasons for each CEO departure – retirement, succession plan, promotion, political appointment, move to a new company, resignation, termination, conclusion of interim period, corporate governance change, merger or demerger, or illness. For each CEO departure, Weber Shandwick obtained information on the new CEO’s name, title, insider/outsider status, date of announcement and start date. The firm also tracked the outgoing CEO’s name, title, insider/outsider status, any continuation with the company and additional relevant information.  

For purposes of the analysis:

• Insider CEOs are defined as executives who have worked inside the company for three or more years before being announced as the new CEO. 
• Outsider CEOs are defined as executives who either have never worked for the company or have been employed by the company for less than three years before being announced CEO. 
• CEOs were defined as the company’s highest-ranking executive.  In some countries, such as Japan, the president holds this position.