New CEOs…stats and facts
New CEOs. A topic I think about and work on a lot! Because how CEOs are transitioned reflects on the reputation of the company. And because our new research found that 45% of a company’s reputation is attributed to the reputation of the CEO. Last weekend I read about the first 100 days of a CEO of a major retailer in a turn-around situation who said, “Tomorrow is not fast enough” when asked how soon he expected to implement change. That sentence stuck in my mind as I was writing this post about CEO newbies.
This week I received a report from a colleague by Feigen Advisors on New CEOs appointed in 2014. Feigen Advisors selected the 29 new CEOs in the S&P 250 and profiled each one, along with some essays from highly regarded advisors. A few stats from the research:
- Average tenure of their predecessors was 10+ years
- 34% were CFOs before being named CEOs. Nearly 60% were given the COO or President job before being named CEO
- Nearly 9 in 10 were insiders (had been with the company)
- 30% had spent at least 25 years with the companies they now lead
- 10% or “3” were female in this S&P sample; only 2.4% of CEOs are female in the Fortune 1000. Ouch!
- Among this class of New CEOs, the most common undergraduate major was engineering (28%). Post-college, the most popular graduate degree was an MBA (31%). There were a few attorneys as well (3). Not too many CMOs or CCOs
- Median or average age going into the job was 54 years old; 62 years old for their predecessors’ average retirement age
- 38% sit on external public boards (I expected the number to be higher actually. Interestingly, many of these new CEOs were on these boards before being named which indicates that it is part of the CEO preparation)
All great information. I was particularly interested in the timing of the announcement. We often get asked what the ideal time is to announce a new CEO and although I have my own insights, I am grateful to have this new stat to add to my arsenal. They found that the average time between announcement and appointment was about two months. A full 76% were announced within 2 to 3 months, 17% between 3 and 6 months and only 2 individuals were named six months in advance.
We usually counsel that the ideal time frame is 3 months because if it is shorter, it could look like there is a problem and if too much longer, it looks like there is a lack of confidence or not enough training went into the person being chosen. But like most things, it depends on the situation.