May 21, 2019

2018 saw record CEO turnover as "ethical lapses" prompted firings

More CEOs than ever before at the world's 2,500 largest companies left or were removed from their position last year, new data from PwC shows, a record high of 17.5%.

By the numbers: That's 3 percentage points higher than the rate in 2017 and above what has been the norm for the last decade.

The big picture: Most strikingly, analysts noted, was that the reason CEO were fired. For the first time in the study's history, more CEOs were dismissed for "ethical lapses" than for financial performance or board struggles.

  • PwC noted that overall "forced turnovers" were in line with recent trends at 20% of overall leadership changes.

What they're saying: "We define dismissals for ethical lapses as the removal of the CEO as the result of a scandal or improper conduct by the CEO or other employees; examples include fraud, bribery, insider trading, environmental disasters, inflated resumes, and sexual indiscretions."

Why you'll hear about this again: The last kind of ethical lapse stood out, as corporate boards finally began adopting zero-tolerance policies toward executive mistreatment of female staffers.

  • "The growing presence and power of activist investors could also be a contributing factor to the higher rate of CEO turnover," PwC analysts noted.

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