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 / Summer 2013 / Issue 71(originally published by Booz & Company)


“It’s Time for a Change”

Regional Differences

Significant differences in turnover rates were found depending on where companies were headquartered. The rates of CEO turnover among companies based in mature economies around the world all hovered around the overall average of 15 percent in 2012 (see Exhibit 3). But only 8.1 percent of Chinese companies brought in new CEOs last year, whereas almost a quarter of companies based in Brazil, India, and Russia chose new leaders.

Unsurprisingly, financial performance also plays a role in the nature of CEO turnover events. Among companies that had a CEO turnover between 2009 and 2012 and were in the lowest quartile of performance as measured by total shareholder return over the outgoing CEO’s tenure, 39 percent had forced out their CEO, compared with just 18 percent among companies in the top quartile (see Exhibit 4). During the same period, companies in the bottom quartile also hired outsiders at significantly higher rates than the top-performing companies—27 percent versus 19 percent—no matter the cause for the change in leadership. Other analysis covering these years showed that in general, insider CEOs have led their companies to better overall returns.

All in all, our analysis of CEO turnover in 2012 among public companies makes clear two distinct and in some ways contradictory trends. On the one hand, companies in most geographies are more willing to make changes in their top leadership as they look for faster growth in a stabilizing economy and business environment. On the other hand, most companies, especially the better-performing ones, are planning those changes carefully, and sticking with insiders in hopes of maintaining their strong results. 


Booz & Company’s 2012 Chief Executive Study identified the world’s 2,500 largest public companies, defined by their market capitalization according to Bloomberg on January 1, 2012. Our research team members then identified the subset of those companies that had made a change at the top, and cross-checked the data using a wide variety of printed and electronic sources in many languages. We also used Bloomberg to determine which companies had been acquired or merged in 2012.

We investigated each company that appeared to have changed its CEO for confirmation that a change had occurred in 2012, and sought out additional details—title, tenure, chairmanship, nationality, professional experience, and so on—for both the outgoing and incoming chief executives, as well as any interim chief executives.

We accepted the information provided by the companies themselves on most data elements, except to confirm the reason for an executive’s departure. For that, we turned to outside press reports and other independent sources. Finally, Booz & Company staff around the world separately validated each succession event as part of the effort to learn the reason for specific CEO changes in their regions.

To distinguish between mature and emerging economies, Booz & Company followed the United Nations Development Programme 2012 ranking.

For data on the companies’ total shareholder returns during a CEO’s tenure, we also turned to Bloomberg, and included reinvestment of dividends, if any. We then adjusted that data to reflect differences in regional markets (measured as the difference between the company’s return and the return of the local regional index over the same time period) and annualized it.

Reprint No. 00183

Author Profiles:

  • Ken Favaro is a senior partner with Booz & Company based in New York. He leads the firm’s work in enterprise strategy and finance.
  • Per-Ola Karlsson is a senior partner with Booz & Company based in Stockholm. He serves clients across Europe and the Middle East on issues related to organization, change, and leadership.
  • Gary L. Neilson is a senior partner with Booz & Company based in Chicago. He focuses on operating models and organizational transformation.
  • Also contributing to this article were Booz & Company senior manager Josselyn Simpson and specialist Jane Kim, and s+b contributing editor Edward H. Baker.
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