Changes in CEO Succession
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The Conference Board has put out a report looking at CEO succession that has some interesting takeaways. Among them:
- In 2018, there were more “nonvoluntary departures” of CEOs than at any time since 2002 (think: Bernie Ebbers.). They accounted for 30.5% of all CEO successions, up from the average of 24.1%. “Nonvoluntary departures,” of course, is a term of art. Dumped CEOs normally say they resigned voluntarily. The Conference Board counts any departing CEO under the age of 64 whose company’s shareholder performance is in the bottom quartile of the S&P 500 as “nonvoluntary.”
- The #MeToo movement was a major cause. Five of the 59 recorded CEO successions were related to it: Les Moonves at CBS, Brian Krzanich at Intel, Steve Wynn at Wynn Resorts, Brian Crutcher at Texas Instruments, and Martin Anstice at Lam Research.
- The tenure of CEOs is getting longer. Among those departing last year, the average was 10 years, which marked the third time in the last four years departing CEO tenure reached the double digits. The low, in 2009, was seven years. Fun fact: the longest tenured CEO is Leslie Wexner of L Brands, who has been in the job since 1963.
- Internal candidates won the top job in 2018 at the highest level ever recorded by The Conference Board, with roughly nine out of 10 transitions going to an internal candidate. That’s a big change from the previous year, when less than six in 10 went to internal candidates.
Separately, Coupa CEO Rob Bernshteyn came by the Fortune offices yesterday, and shared some interesting data culled from his company’s tracking of some $1.5 trillion worth of business spending. Overall spending was up slightly from the previous quarter, but health and life sciences spend took a sharp dive. The reason? Bernshteyn suspects it’s uncertainty about future health care policy.
More news below.
Google CEO Sundar Pichai is taking over the reins at parent company Alphabet, too. Google co-founders Larry Page and Sergey Brin are stepping down, though they will remain on the board (and keep controlling Alphabet through their special voting stock). Fortune
President Trump roiled the markets yesterday by saying he would be fine with waiting until after next year's presidential election before striking a limited trade deal with China. Chinese officials say talks are still on track. If the two sides don't reach some sort of agreement by the end of next week, the U.S. is set to drastically increase its tariffs on Chinese imports. Wall Street Journal
China is most displeased after the U.S. House of Representatives approved a bill (by 407 votes to one) that forces the Trump administration to condemn abuses against Uighur Muslims in the Xinjiang region, and to impose sanctions on the province's Communist Party secretary, Chen Quanguo. Beijing says the bill is malicious. CNBC
U.K. Prime Minister Boris Johnson is sticking by his plans to introduce a French-style digital tax, despite the fury that the Trump administration has directed at Paris over the issue. Johnson: "We need to look at the operation of the big digital companies and the huge revenues they have in this country and the amount of tax that they pay… They need to make a fairer contribution." BBC
AROUND THE WATER COOLER
India is pushing for enforcement of a ban on online medicine sales. The ban was instituted via a court order one year ago—on the basis that regulations are still being finalized and unregulated online sales could lead to abuse—but some states have apparently not been cracking down as they ought to. Reuters
Bloomberg reckons automakers are cutting over 80,000 jobs in the coming years, based on recent announcements. The cuts are concentrated in the U.S., U.K. and Germany, although faster-growing economies are also feeling the effects. The reasons include weakening demand and the vast investments that are required to introduce the next generation of car technology. Bloomberg
Here are two new pieces about reforming capitalism. The first comes from WEF founder Klaus Schwab, who argues that climate activist Greta Thunberg is partly responsible for a turn away from shareholder capitalism. The second comes from the Financial Times' Martin Wolf, who prescribes five measures: "refurbish" competition policy; tweak finance rules, including by eliminating the tax-deductibility of interest; reform corporate law to combat "myopic" behavior; fight inequality; and take the money out of politics. FT
Remember last year's scandal when a Chinese scientist "created" a pair of gene-edited twins? He Jiankui's research has just been released and scientists say he may have failed in his aim of immunizing the twins against HIV. What's more, the editing may have created unintended mutations. South China Morning Post
This edition of CEO Daily was edited by David Meyer.
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