Time for
new CEOs
The 2012 chief
executive study
Authors
Media Contacts
Chicago
Abu Dhabi
Paris
Sydney
Gary L. Neilson
Senior Partner
+1-312-578-4727
gary.neilson
@strategyand.pwc.com
Joanne Alam
+961-1-985-655
joanne.alam
@strategyand.pwc.com
Beatrice Malasset
+33-1-44-34-3131
beatrice.malasset
@strategyand.pwc.com
Kristine Anderson
+61-2-9321-1931
kristine.anderson
@strategyand.pwc.com
Amsterdam
São Paulo
Tokyo
Monique De Meyere
+31-20-504-1984
monique.demeyere
@strategyand.pwc.com
Deborah Frattini
+55-11-5501-6290
deborah.frattini
@strategyand.pwc.com
Ayumi Suda
+81-3-6757-8683
ayumi.suda
@strategyand.pwc.com
London
Shanghai
Martina Mazzon
+44-20-7393-3251
martina.mazzon
@strategyand.pwc.com
Michelle Wang
+86-21-2327-9825
michelle.wang
@strategyand.pwc.com
Dubai
Per-Ola Karlsson
Senior Partner
+46-8-506-190-49
per-ola.karlsson
@strategyand.pwc.com
New York
Ken Favaro
Senior Partner
+1-212-551-6826
ken.favaro
@strategyand.pwc.com
This report was originally published by Booz & Company in 2013.
2
Strategy&
Executive summary
In 2012, the world’s largest 2,500 public companies were very active
in putting in place the leaders they need: 15.0 percent of CEOs at those
companies left office last year, up from 14.2 percent in 2011. This is the
second-highest rate of CEO turnovers in the 13-year history of our study,
lower only than in 2005.
Moreover, in 2012 we saw the largest share of planned CEO successions
in all the years we’ve studied. Planned successions (as opposed to CEOs
who were forced out or who lost their jobs because of an acquisition)
accounted for 72 percent of all turnovers in 2012, up from 46 percent in
2006. This suggests that companies are working more thoughtfully than
ever to ensure they put in place new leaders who will best serve the
company for years to come.
Who are those leaders? For the most part, they are familiar faces:
Companies promoted insiders (people already at the company) 71
percent of the time — and a quarter of all new leaders had worked at
the same company for their whole career; 81 percent of new CEOs were
from the same country where the company’s headquarters was located;
and 95 percent were men.
Here are some of the main findings of the 2012 Chief Executive Study,
Strategy&’s 13th annual examination of CEO succession trends at the
2,500 largest public companies in the world:
• Companies are actively generating CEO successions and working
thoughtfully to ensure they get the leaders they need, after a steep
fall in turnovers during the recent recession.
In 2012, the 2,500 largest public companies in the world generated the
second-highest turnover rate since 2000: 15.0 percent.
–– With this rate following last year’s 14.2 percent rate, we see CEO
turnover restabilizing around its historical level after a
significant dip during the recent recession. The 2012 rate is
Strategy&
3
slightly higher than the eight-year historical average of just over
14 percent.
–– The highest turnover rate in the history of the study was 15.4
percent in 2005, which followed close on the heels of low rates
during the recession of the early 2000s.
Companies are increasingly planning their successions, seeking to build
on the leadership stability most have enjoyed as the economy has
improved.
–– From a low of 46 percent in 2006, the share of turnovers that were
planned has risen steadily, to 72 percent in 2012. This is the highest
share of planned turnovers since Strategy& began the study in
2000. The share of planned turnovers this year may be so high in
part because some companies postponed a transition during the
worst of the crisis and are now feeling able to manage a change.
–– Turnovers related to M&A accounted for only 9 percent of all
turnovers in 2012, the lowest share ever. This is simply a result of
the overall low rate of major deals in 2012.
–– Forced turnovers, at 19 percent of all turnovers in 2012, are their
second-lowest share ever, and the fourth-lowest rate ever. This is
another sign that companies are now able to take a thoughtful
approach to transitions: They are stable enough to force someone
out if they need to, but in general they have the leaders they want
or the time to allow a CEO to improve performance.
• This year we looked in depth at the professional backgrounds of the
incoming class of CEOs. The data suggests that the “global CEO” is
more mythical than real — indeed, companies often seek familiarity
in a new CEO.
With 300 incoming CEOs, this is the largest class since we started our
study in 2000.
Most companies are actively focusing on developing the leaders they
need: 71 percent of new CEOs in 2012 are insiders — people who were
promoted from within.
Though the companies we studied are large ones, most of which operate
on a global scale, they tend to stick close to home when picking a CEO.
In 2012, 81 percent of companies that hired a CEO chose one from the
same country where company headquarters is located, and an
additional 9 percent hired a CEO from a different country but the same
region as headquarters.
4
Strategy&
Fifty-five percent of this year’s new CEOs joined their current company
from one in the same industry, whether they did so as CEO or in
another position.
• Another way in which the new class of CEOs is familiar is gender:
Only 5 percent of the incoming CEOs in 2012 are women — a notable
rise from the 3 percent average over the prior three years, but still a
tiny share.
• In terms of educational background, 29 percent of new CEOs in 2012
have an MBA. The median age of those with an MBA was 52, two
years lower than for those without, suggesting that taking time out
to earn an MBA may speed up a career in the long run.
• In 2012, the hiring done by the 250 largest companies was a little
different from that of smaller ones (the bottom 2,250): The larger
companies’ incoming CEOs were more often insiders (83 percent vs.
69 percent), more often had experience in different regions than
company headquarters (52 percent vs. 44 percent), and more often
had MBAs (41 percent vs. 28 percent).
Strategy&
5
CEO turnover rates are still
rising — and more transitions
than ever are planned
Exhibit 1
CEO turnover rate by succession reason
Turnover rate
16%
14%
14.7%
12.9%
2.5%
15.4%
3.2%
12%
10.9% 10.8%
3.2%
10%
2.4% 1.4%
8% 3.4%
2.4%
13.8%
2.8%
14.4% 14.3%
2.2%
3.6%
9.8%
1.3%
14.4%
2.6%
4.5%
4.6%
4.2%
5.1%
1.8%
3.4%
14.2%
11.6%
2.2%
1.8%
2.2%
2.2%
3.2%
6.0%
5.0%
5.3%
7.7%
9.2%
6.6%
6.8%
7.2%
9.1%
7.7%
9.8%
0%
2000 2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
10.8%
4% 6.4%
2%
1.4% M&A
2.8% Forced
4.4%
6%
15.0%
Planned
2012
CEO turnover events as % of top 2,500 public companies
• CEO turnover at the 2,500 largest public companies in the world is
up considerably, from 14.2 percent in 2011 to 15.0 percent in 2012.
The number of CEO turnovers in 2012 (375) is the second-largest in
the 13-year history of our study, second only to that in 2005.
• The rate of planned turnovers (compared with forced or M&A-related
ones) has been increasing over the years and in 2012 reached 10.8
percent (270) of all 2,500 companies we examined, the highest rate
ever.
6
Strategy&
The share of turnovers that were planned has risen steadily from a low
of 46 percent of all turnovers in 2006 to 72 percent in 2012. The surge
in 2011 and 2012 may be in part because some companies had put off a
turnover until they felt stable enough to manage the change.
The low number of large M&A deals in 2012 led to one of the lowest
M&A–induced turnover rates we’ve seen (1.4 percent of all 2,500
companies and 9 percent of the year’s turnovers).
There was also quite a low rate of forced turnovers in 2012, just 2.8
percent of all 2,500 companies and 19 percent of the year’s turnovers.
Taken together, all this may signal that companies are taking active,
considered steps to put in place the new leadership they believe they need
for the years to come. They appear to feel stable enough to move decisively
rather than postponing action, as happened during the depths of the
economic crisis. It’s also likely that increased planning is a response to
demands for greater corporate accountability.
(For more data on turnovers by region and industry, see pages 38
and 40.)
Strategy&
7
The number of CEO turnovers in 2012 is the
second-largest in the 13-year history of our study,
second only to that in 2005.
The rising rate of planned turnovers may signal that
companies are taking active, considered steps to put
in place the new leadership they believe they need for
the years to come. They appear to feel stable enough
to move decisively rather than postponing action, as
happened during the depths of the economic crisis.
8
Strategy&
New CEOs are mostly
familiar faces
Exhibit 2
Incoming CEO status — insider vs. outsider
20%
80%
Total
2009–11
29%
29%
27%
71%
71%
73%
Total
2012
Forced
2009–11
Forced
2012
18%
82%
Planned
2009–11
Outsider
30%
70%
Planned
2012
Breakdown by succession reason: 2009–11 vs. 2012
Insider
Note: The total for
2009–11 shown here may
be different from totals
reported in 2009–11
because in those years
some incoming CEOs were
characterized as outsiders
in a way inconsistent with
prior and subsequent
analysis.
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information.
• Seventy-one percent of new CEOs in 2012 were insiders — people
already at the company when they became CEO.
This is a notable decrease in the share of insiders compared with
previous years. Indeed, between 2009 and 2011, the average share of
insiders was 80 percent. More companies may now feel stable enough to
take a bit of a risk on an unknown leader.
Strategy&
9
In planned turnovers the share of insiders dropped
from 82 percent on average between 2009 and 2011
to 70 percent in 2012. Given that these transitions
are planned, it seems that companies are thoughtfully
evaluating the risks they may be taking on an outsider.
10
Strategy&
Interestingly, the share of insiders in forced turnovers increased by two
percentage points in 2012, from 71 percent in 2009–11 to 73 percent in
2012.
The entire drop in hiring insiders is in planned turnovers: from 82
percent insiders on average between 2009 and 2011 to 70 percent in
2012. Given that these transitions are planned, it seems that companies
are thoughtfully evaluating the risks they may be taking on an outsider.
Those risks may be mitigated somewhat by the fact that among the new
CEOs in 2012 who are outsiders, 56 percent came from the same
industry as their new company.
• The share of insiders varies by where the company is headquartered.
In 2012, companies headquartered in Brazil, Russia, and India least
often hired insider CEOs: Only 56 percent did so.
In the U.S. and Canada, the portion that hired insiders in 2012 was 78
percent.
• Other analysis we’ve done shows that new insider CEOs in 2012 have
a median tenure at their company of 12 years, ranging from a low of
eight years in Western Europe, and in Brazil, Russia, and India, to a
high of 33 years in Japan.
• Companies hiring insiders are increasing their chances of future
stability, our data suggests, since over the past 13 years insiders have
on the whole served as CEO about a year and a half longer than
outsiders (7.4 years mean tenure compared with 5.9 years for
outsiders).
(For more data on insiders vs. outsiders, see page 41.)
• There’s another way in which this year’s new CEOs are familiar:
Almost all are men. Among new CEOs in 2012, only 5 percent — or
15 — are women. This figure is the highest since 2009, but still tiny.
All but one of these new female CEOs were hired at companies
headquartered in mature markets.
Strategy&
11
There’s another way in which this year’s new CEOs
are familiar: Almost all are men. Among new CEOs
in 2012, only 5 percent — or 15 — are women. This
figure is the highest since 2009, but still tiny.
12
Strategy&
Companies in trouble more
often force a turnover and
more often look outside
Exhibit 3
Incoming CEO status (insider vs. outsider) by succession reason
(forced vs. planned)
17%
27%
17%
Outsider
Insider
19%
15%
16%
16%
31%
73%
83%
79%
Total
83%
21%
85%
84%
69%
Forced Planned
39%
61%
Lowest quartile
of performance
23%
Forced Planned
22%
78%
Second quartile
of performance
Total
Forced Planned
14%
86%
Third quartile
of performance
84%
35%
65%
28%
72%
77%
Total
81%
Total
Forced Planned
18%
82%
Highest quartile
of performance
Breakdown by annualized shareholder returns over outgoing CEOs’ tenure: 2009–12
Note: Total shareholder
returns are annualized over
outgoing CEOs’ tenure and
are regionally adjusted,
meaning that performance
is measured relative to a
regional index (S&P 500, Brazil Bovespa,
FTSE 100, CAC 40, etc.).
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information.
• Poorly performing companies (in terms of annualized total
shareholder returns over the outgoing CEO’s tenure) more often
forced out their CEOs than their better-performing counterparts did
between 2009 and 2012.
Among the companies in the bottom TSR quartile, 39 percent of
turnovers were forced (excluding M&A).
Among companies in the top TSR quartile, the share of forced turnovers
was 18 percent, less than half the share in the bottom quartile.
Strategy&
13
• Poorly performing companies also more often hired outsiders than
their better-performing counterparts did between 2009 and 2012,
perhaps indicating that they’re seeking new ideas to improve
performance.
In planned successions, companies in the bottom TSR quartile hired
outsiders 31 percent of the time, compared with 16 percent among betterperforming companies.
Looking at both planned and forced successions, companies in the bottom
TSR quartile hired outsiders 27 percent of the time, compared with 18
percent across all three better-performing quartiles.
14
Strategy&
When the outgoing CEO is
chairman of the board,
the new CEO is even more
often an insider
Exhibit 4
Incoming CEO status — insider vs. outsider
Outsider
8%
Outsider
24%
92%
Planned turnover events
when outgoing CEO
remained or became chairman
N=279
76%
Insider
Insider
Planned turnover events
when outgoing CEO
did not remain or became chairman
N=590
Breakdown by use of apprenticeship model: 2009–12
Note: Exhibit excludes
turnover events resulting
from M&A, interims, and
events with incomplete
turnover information.
Exhibit also excludes
forced turnover events.
• The apprenticeship model — in which the outgoing CEO remains or
becomes chairman of the board and can “apprentice” the incoming
CEO in a planned transition — is still a fairly common succession
model.
In 2012, the outgoing CEO remained or became chairman of the board
in 29 percent of all planned transitions.
The apprenticeship model in 2012 was most common in Japan (69
percent) and least common in Europe (15 percent).
Strategy&
15
• When companies use the apprenticeship model, the new CEO is
much more likely to be an insider than in other planned turnovers.
When the outgoing CEO remained or became chairman of the board,
the share of insiders named CEO in a planned turnover was 92 percent
between 2009 and 2012, compared with 76 percent when companies
did not use the apprenticeship model.
Companies using the apprenticeship model seem to be particularly
focused on continuity, both because they want to keep the former CEO
engaged and because they almost always choose insiders.
(For more data on apprenticeship models in CEO succession,
see page 42.)
16
Strategy&
Combined chairman–CEO
appointments remain at
low levels
Exhibit 5
Percentage of incoming CEOS who also hold the position of chairman
65%
61%
North America
China & rest of Asia
Global average
Europe
Japan
63%
60%
55% 53% 52%
50%
45% 39%
40%
35%
50%
48%
44%
48%
40% 33%
37%
33%
32%
31%
25%
20%
18%
18%
29%
25%
25%
26%
20%
19%
15%
16%
16%
26%
23%
19%
15%
13%
10%
5%
38%
33%
33%
30% 33% 30%
Note: “North America”
includes the U.S., Canada,
and Mexico.
31%
24%
18%
11%
10%
2%
0%
2000
2%
0%
2001
0%
2%
2002
2003
2004
2005
2006
2007
2008
18%
17%
20%
18%
16%
14%
17%
12%
7%
13%
14%
6%
5%
2009
14%
12%
9%
9%
2010
20%
0%
2011
0%
2012
“Europe” includes Austria,
Belgium, Britain, Croatia,
Cyprus, Czech, Denmark,
Finland, France, Germany,
Greece, Guernsey,
Hungary, Ireland, Italy,
Jersey, Luxembourg, Netherlands, Norway,
Poland, Portugal, Romania,
Russia, Spain, Sweden,
Switzerland, and Turkey.
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information.
• The share of new CEOs also appointed chairman of the board in 2012
reached a minimum seen only once before: 12 percent (the same as
in 2009).
Strategy&
17
• This convergence on a low level of joint appointments is likely
happening because more and more companies consider these
appointments poor corporate governance. In some industries,
notably financial services in recent years, regulators have also
discouraged the practice.
• The share of joint appointments varies markedly among regions — in
2012, it ranges from a high of 20 percent in the U.S., Canada, and
Mexico to 0 percent in Japan. One reason for the Japanese number
may be that the roles of CEO and chairman there tend to have very
different responsibilities.
18
Strategy&
Most new CEOs have the same
nationality as their company
headquarters
Exhibit 6
Incoming CEOs’ nationality region: Same as or different from
corporate HQ location
930
10%
219
12%
186
6%
140
0%
1%
154
45
2%
0%
19%
1%
104
82
13%
16%
7%
5%
24%
83%
83%
70%
99%
79%
98%
86%
78%
Global
U.S./
Canada
Western
Europe
Japan
Other
mature
China
Brazil,
Russia,
India
Other
emerging
6%
2%
Breakdown by corporate HQ region: 2009–12
Different country,
different region
Different country,
same region
Same country
Note: “Other mature”
economies include
Argentina, Australia, Bahrain,
Chile, Cyprus, Czech
Republic, Hong Kong,
Hungary, New Zealand,
Poland, South Korea, etc.
“Other emerging” economies
include Egypt, Kazakhstan,
Mauritius, Mexico, Mongolia,
Nigeria, Saudi Arabia, South
Africa, Turkey, etc.
“Mature” countries are
defined as per the U.N.
Development Programme
2012 ranking of countries
with “very high human
development” (human
development index
>0.788); all others are
“emerging” countries.
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information.
Strategy&
19
• Most companies hire CEOs from the same country in which the
company is headquartered, adding to the familiarity they get when
they hire insiders.
Between 2009 and 2012, 83 percent of companies hired CEOs from the
same country in which the company’s headquarters is located.
In addition, companies hiring foreigners have very often selected CEOs
who come from the same region as the company’s headquarters:
Between 2009 and 2012, 7 percent of all hires were from different
countries in the same region.
• Depending on where they are headquartered, companies have shown
marked differences in how often they have hired foreigners over the
past four years.
Western European companies most often hired CEOs with a different
nationality (30 percent of the time), but only 23 percent of those (6
percent of all new CEOs at Western European companies) came from
outside the region.
Japanese companies, on the other hand, hired a non-Japanese CEO only
1 percent of the time.
20
Strategy&
Most companies hire CEOs from the same country
in which they are headquartered, adding to the
familiarity they get when they hire insiders.
Between 2009 and 2012, 83 percent of companies
hired CEOs from the same country in which the
company’s headquarters is located.
Strategy&
21
Where new CEOs come from:
Regions
Exhibit 7
Incoming CEOs’ nationality region
219
186
140
1%
3%
7%
154
4%
45
104
2%
82
4%
7%
2%
1%
1%
2%
9%
1%
11%
3%
4%
99%
94%
98%
4%
88%
1%
87%
1%
84%
1%
81%
U.S./
Canada
Western
Europe
Japan
Other
mature
China
Brazil,
Russia,
India
Breakdown by corporate HQ region: 2009–12
Other
emerging
U.S./Canada
Western Europe
Japan
Other mature
China
Brazil, Russia, India
Other emerging
CEO nationality Is
same region as
corporate HQ region
Note: “Other mature”
economies include
Argentina, Australia,
Bahrain, Chile, Cyprus,
Czech Republic, Hong
Kong, Hungary, New
Zealand, Poland, South
Korea, etc.
“Other emerging”
economies include Egypt,
Kazakhstan, Mauritius,
Mexico, Mongolia, Nigeria,
Saudi Arabia, South Africa,
Turkey, etc.
“Mature” countries are
defined as per the U.N.
Development Programme
2012 ranking of countries
with “very high human
development” (human
development index >0.788);
all others are “emerging”
countries.
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information.
22
Strategy&
• Companies headquartered in “other mature” markets most often
hired CEOs from a different region: Between 2009 and 2012,
19 percent of the incoming CEOs at companies in those countries
came from another region. More of them came from Western Europe
(9 percent) than any other region.
• Indeed, Western Europe stood out as a source of CEOs for other
regions between 2009 and 2012. It is the only region that supplied
new CEOs to all the other regions.
• Japan, on the other hand, supplied CEOs to no other region between
2009 and 2012.
Strategy&
23
Western Europe stood out as a source of CEOs
for other regions between 2009 and 2012. It is
the only region that supplied new CEOs to all the
other regions.
24
Strategy&
Global experience not required
Exhibit 8
Incoming CEOs with experience in different regions: 2012
279
13
29
26
78
30
48
55
45%
15%
17%
38%
45%
47%
56%
60%
55%
85%
83%
62%
55%
53%
44%
40%
Total
China
Japan
Brazil,
Russia,
India
U.S./
Canada
Other
emerging
Other
mature
Western
Europe
Breakdown by company HQ region
279
29
14
23
35
27
64
57
45%
17%
29%
35%
40%
44%
47%
67%
55%
83%
71%
65%
60%
56%
53%
33%
Total
Japan
China
Brazil,
Russia,
India
Other
mature
Other
emerging
U.S./
Canada
Western
Europe
Breakdown by CEO nationality region
Strategy&
Has not worked
in different regions
Has worked
in different regions
Note: “Previous experience
in different regions” means
incoming CEOs’ experience
in regions other than
company HQ region; data is
not exhaustive.
“Other mature” economies
include Argentina, Australia,
Bahrain, Chile, Cyprus,
Czech Republic, Hong Kong,
Hungary, New Zealand,
Poland, South Korea, etc.
“Other emerging”
economies include Egypt,
Kazakhstan, Mauritius,
Mexico, Mongolia, Nigeria,
Saudi Arabia, South Africa,
Turkey, etc.
“Mature” countries are
defined as per the U.N.
Development Programme
2012 ranking of countries
with “very high human
development” (human
development index >0.788);
all others are “emerging”
countries.
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information.
25
• In 2012, 45 percent of incoming CEOs had experience working in a
region other than their current company’s headquarters region at
some point in their careers.
• Whether a new CEO has global working experience varies widely by
the region in which his or her company has its headquarters.
Western European companies most often hired CEOs with global
working experience: In 2012, 60 percent of those companies did so.
At companies in the U.S. and Canada, 45 percent of incoming CEOs had
global working experience.
Chinese companies least often hired CEOs with global working
experience: In 2012, only 15 percent did so.
• Whether new CEOs have global working experience also varies
markedly depending on their origin.
CEOs from Western Europe had most often worked in different regions:
67 percent of those incoming leaders in 2012 had done so.
CEOs from Japan had done so least often: Only 17 percent of those who
became new CEOs in 2012 had worked outside Japan.
26
Strategy&
Just over half of new CEOs
joined their company from
one in the same industry
Exhibit 9
Incoming CEOs: Joined from the same or different industry
224
36
31
19
13
38
22
25
15
25
45%
17%
32%
37%
38%
47%
50%
64%
67%
72%
55%
Total
83%
68%
Financial Consumer
services
staples
63%
62%
53%
IT
Telecom
Energy
50%
36%
33%
28%
Industrials Materials Consumer Utilities
discretionary
Breakdown by current company industry: 2012
Joined from
same industry
Joined from
different industry
Note: Exhibit shows
incoming CEOs by whether
they worked in the same
or a different industry
immediately before joining
their current company,
whether they joined as
CEO o earlier; data is not
exhaustive. Incoming CEOs
who worked at the same
company their entire career
are excluded.
“Consumer discretionary”
includes automobiles and
components, consumer
durables and apparel,
consumer services, media,
and retailing.
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information.
Strategy&
27
• Fifty-five percent of this year’s new CEOs joined their current
company from one in the same industry (whether they joined their
current company as CEO or in another position).
• There are large differences among industries as to whether
companies hired the person who became their new CEO in 2012
from a different industry.
Utilities most often named as CEO someone who had joined the
company from a different industry: 72 percent did so. This may be
because many utilities have been under significant performance
pressure and are looking for new ideas.
Financial-services companies did so least often: Only 17 percent of
CEOs appointed in that industry had joined the company from a
different industry.
28
Strategy&
Where new CEOs come from:
Industries
Exhibit 10
Incoming CEOs’ prior industries
36
31
16%
19
13
38
10.5%
8%
8%
5%
15%
83%
53%
63.2%
68%
22
25
15
25
32%
8%
4%
4%
20%
24%
13%
4%
4%
4.5%
4.5%
4.5%
48%
7%
24%
27%
62%
12%
18%
10.5%
11%
6%
Financial
services
3%
13%
Consumer
staples
10.5%
15%
5.3%
IT
Telecom
Financial services
Consumer staples
IT
Telecom
Energy
Industrials
Materials
Consumer discretionary
Utilities
8%
8%
Energy
4%
50%
36%
33%
Materials
Consumer
discretionary
28%
4.5%
Industrials
Breakdown by current company industry: 2012
Utilities
Note: Exhibit shows
incoming CEOs by which
industry they worked in
immediately before joining
the current company,
whether they joined as
CEO or earlier; data is not
exhaustive. Incoming CEOs
who worked at the same
company their entire career
are excluded.
“Consumer discretionary”
includes automobiles and
components, consumer
durables and apparel,
consumer services, media,
and retailing.
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information.
Strategy&
29
• Incoming CEOs in 2012 who joined their current company from
the financial-services industry not only took the vast
majority — 83 percent — of new CEO roles in that industry,
but also took meaningful shares of new CEO roles in all other
industries.
At industrials companies, 32 percent of incoming CEOs in 2012
came from the financial-services industry, the highest share in a
non-financial industry.
At telecom, energy, and materials companies, 8 percent of incoming
CEOs in 2012 came from the financial-services industry, the lowest
shares in non-financial industries.
Financial services is the only industry that supplied new CEOs to all
other industries.
• The materials industry is notable because it’s the only industry in
which the single largest share of incoming CEOs in 2012 was from
a different industry: 48 percent of the new CEOs in materials
came from industrials companies.
30
Strategy&
A full quarter of all new CEOs
have worked at only one
company for their whole career
Exhibit 11
Incoming CEOs’ previous experience in different companies: 2012
N=300
32
No
25%
53
34
68%
71%
27
81%
83
86%
57
88%
14
93%
25%
Has not worked
in a different company
Has worked in
a different company
Note: “Previous experience
in different companies”
means new CEO had
worked at another company
at any time before being
named CEO at current
company.
75%
Yes
75%
Japan
32%
29%
19%
Brazil,
Other
Other
mature emerging Russia,
India
14%
12%
U.S./
Western
Canada Europe
Breakdown by company HQ region
7%
China
“Other mature” economies
include Argentina, Australia,
Bahrain, Chile, Cyprus,
Czech Republic, Hong
Kong, Hungary, New
Zealand, Poland, South
Korea, etc.
“Other emerging”
economies include Egypt,
Kazakhstan, Mauritius,
Mexico, Mongolia, Nigeria,
Saudi Arabia, South Africa,
Turkey, etc.
“Mature” countries are
defined as per the U.N.
Development Programme
2012 ranking of countries
with “very high human
development” (human
development index >0.788);
all others are “emerging”
countries.
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information.
Strategy&
31
• Twenty-five percent of new CEOs in 2012 have worked only at the
company where they’re now CEO; 75 percent have worked at one or
more companies other than the one they’re now leading.
• Working at only one company is far more common in some countries
than others.
Companies in Japan lead the pack, by far, in terms of CEOs who have
spent their whole career at one company: 75 percent of new CEOs in
Japanese companies in 2012 have never worked at another company.
In 2012, companies in China hired the largest share of CEOs with
experience in other companies; 93 percent of new CEOs in Chinese
companies had worked at a different company at some point in their
career.
At companies in Western Europe and in the U.S./Canada, the shares
of new CEOs with experience at other companies are also high, at
88 percent and 86 percent, respectively.
32
Strategy&
New CEOs’ education
Exhibit 12
Shares of incoming CEOs with selected degrees: 2012
239
276
276
No
Yes
0.4%
71%
91%
99.6%
29%
9%
Undergraduate
MBA
Ph.D.
Note: Exhibit excludes
turnover events resulting
from M&A, interims, and
events with incomplete
turnover information.
• All but one of the new CEOs in 2012 have an undergraduate degree,
but few have MBAs or Ph.D.s.
Only 29 percent of the new CEO class in 2012 has an MBA.
Only 9 percent of the new CEO class in 2012 has a Ph.D.
• Having an MBA may slightly accelerate the path to the chief
executive’s office, but having a Ph.D. doesn’t seem to have the
same effect.
Strategy&
33
The median age of new first-time CEOs in 2012 with an MBA was 52
years, just slightly lower than that of CEOs without an MBA, which
was 54.
The median age of new first-time CEOs in 2012 who have a Ph.D. was
58 years, whereas for those without the degree it was 53.
• Companies in different regions hired new CEOs with MBAs at very
different rates.
Companies from emerging markets other than BRIC countries (Brazil,
Russia, India, and China) most often hired CEOs with MBAs: In 2012,
45 percent of new CEOs in companies headquartered in these markets
have the degree.
Thirty-six percent of new CEOs in 2012 at companies headquartered in
the U.S. and Canada have an MBA.
Twenty-three percent of new CEOs in 2012 at companies headquartered
in China have an MBA.
Sixteen percent of new CEOs in 2012 at companies in Western Europe
have an MBA.
• New CEOs from different regions have MBAs at very different
rates too.
New CEOs in 2012 who are nationals of Brazil, Russia, or India have
MBAs more often than CEOs from any other region — exactly 50
percent do.
Thirty-five percent of new CEOs in 2012 who are nationals of the U.S.
and Canada have an MBA.
Twenty-one percent of new CEOs in 2012 who are Chinese nationals
have an MBA.
Eighteen percent of new CEOs in 2012 who are from Western Europe
have an MBA.
34
Strategy&
The largest companies seek a
different mix of experience than
their smaller counterparts
Exhibit 13
Incoming CEOs in 2012
Insider vs.
outsider
30
17%
83%
Top
250
270
31%
69%
Bottom
2,250
Insider
Outsider
Experience
in different
regions
29
250
52%
44%
48%
56%
Top
250
Bottom
2,250
Has not
worked in
different
regions
Worked in
different
regions
Nationality
same as vs.
different from
company HQ
28
25%
75%
Top
250
238
18%
82%
Bottom
2,250
Same
nationality
Different
nationality
Joined from
same or
different
industry
19
32%
68%
Top
250
205
46%
54%
Bottom
2,250
Joined from
same industry
Joined
from
different
industry
Previous
experience
in different
companies
30
63%
37%
Top
250
270
76%
24%
Bottom
2,250
Has not
worked at
another
company
Worked
at another
company
Note: “Previous experience
in different regions” means
an incoming CEO has
experience in regions other
than company HQ region;
data is not exhaustive.
Exhibit shows incoming
CEOs by whether they
worked in the same
or a different industry
immediately before joining
their current company,
whether they joined as
CEO or earlier; data is not
exhaustive. Incoming CEOs
who worked at the same
company their entire career
are excluded.
“Previous experience
in different companies”
means new CEO had
worked at another
company at any time
before being named CEO
at current company.
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information.
Strategy&
35
• The largest companies more often seek CEOs who are very familiar
both with their companies’ sprawling operations and with global
markets.
In 2012, 83 percent of incoming CEOs at the 250 largest companies
were insiders, compared with 69 percent at the smallest 2,250
companies.
In 2012, 52 percent of incoming CEOs at the 250 largest companies had
experience working in regions other than the company’s headquarters
region, compared with 44 percent at the smallest 2,250 companies.
In addition, in 2012 only 75 percent of incoming CEOs at the 250
largest companies were from the same country where their company’s
headquarters was located, compared with 82 percent at the smallest
2,250 companies.
• Whether new CEOs have joined the company from another industry
or have experience at other companies seems to matter less to the
largest companies than to their smaller counterparts.
At the largest 250 companies, 32 percent of the incoming CEOs in 2012
joined their company from a different industry, compared with 46
percent at the smallest 2,250.
And 63 percent of the incoming CEOs at the largest 250 companies in
2012 had worked in another company, compared with 76 percent at the
smallest 2,250.
• Incoming CEOs in 2012 at the 250 largest companies are likelier than
others to have MBAs: 41 percent do, compared with 28 percent at the
smallest 2,250 companies.
• Collectively, this data suggests that the largest companies seek
executives with broad experience, much of which they can provide
internally. In addition, simply because of their size, these companies
usually have much deeper talent pools than smaller companies, as
well as more resources to develop leaders internally. And the largest
companies are likelier to recruit at business schools, so they probably
start with a higher share of executives with an MBA degree.
36
Strategy&
The largest companies seek executives with broad
experience, much of which they can provide
internally. In addition, simply because of their size,
these companies usually have much deeper talent
pools than smaller companies, as well as more
resources to develop leaders internally.
Strategy&
37
Appendix
Companies in Brazil, Russia, and India had the highest
increase in turnover rates in 2012 — and the highest increase
in share of planned turnovers
Exhibit 14
CEO turnover rate by region and succession reason
13.0%
2.4%
2.8%
14.2% 1.1%
2.0%
15.7%
1.8%
1.1%
12.8%
8.1%
U.S./
Canada
Western
Europe
4.8%
5.9%
4.1%
7.8%
15.4%
1.8%
15.0%
8.0%
Japan
0.3%
0.8%
Other
mature
0.6%
11.4%
2.8%
5.5%
8.8%
8.0%
Brazil,
Russia,
India
Other
emerging
4.4%
China
2007–11
23.9%
4.2%
14.7%
14.3%
0.8%
2.6%
3.3%
2.7%
9.0%
U.S./
Canada
10.6%
0.9%
15.3% 0.0%
2.2%
12.2%
4.2%
16.0%
2.6%
13.4%
0.5%
8.1%
1.9%
15.5%
16.2%
2.5%
13.3%
5.7%
Western
Europe
Japan
Other
mature
China
Brazil,
Russia,
India
2012
As % of companies in the top 2,500 based in each region
38
0.4%
Other
emerging
M&A
Forced
Planned
Note: “Other mature”
economies include
Argentina, Australia,
Bahrain, Chile, Cyprus,
Czech Republic, Hong
Kong, Hungary, New
Zealand, Poland, South
Korea, etc.
“Other emerging”
economies include Egypt,
Kazakhstan, Mauritius,
Mexico, Mongolia, Nigeria,
Saudi Arabia, South Africa
Turkey, etc.
“Mature” countries are
defined as per the U.N.
Development Programme
2012 ranking of countries
with “very high human
development” (human
development index >0.788);
all others are “emerging”
countries.
Strategy&
• In 2012, CEO turnover rates increased compared to the average
turnover rates over the prior five years (2007–11) in every region
except Japan.
The increase was highest in Brazil, Russia, and India, where turnover
increased by 55 percent, from 15.4 percent to 23.9 percent.
In Western Europe, the turnover rate increased the least (except for
Japan), growing by 3.5 percent from 14.2 percent in 2007–11 to 14.7
percent in 2012.
In Japan, the 2012 turnover rate dropped 2.5 percent compared with
2007–11, from 15.7 percent to 15.3 percent.
• The share of planned turnovers also increased in 2012, compared
with the 2007–11 average, in all regions except Japan.
The highest increase in planned turnovers was also in Brazil, Russia,
and India; their rate increased 76 percent, from 8.8 percent in 2007–11
to 15.5 percent in 2012. This is a rise in the share of planned turnovers
from 57 percent to 65 percent.
Excluding Japan, planned turnover rates increased the least in the U.S.
and Canada, growing by 15 percent from 7.8 percent in 2007–11 to 9.0
percent in 2012, still an increase from 60 to 63 percent in the share of
planned turnovers.
In Japan the rate dropped 5 percent in 2012 compared with the
2007–11 average, from 12.8 percent to 12.2 percent. This is a drop in
share of planned turnovers of only one and a half percentage points,
from 81.5 to 80 percent.
Strategy&
39
Telecom and utilities remain volatile
Exhibit 15
CEO turnover rate by industry and succession reason: 2012
Average
15%
24%
24%
5%
4%
21%
1%
5%
5%
7%
M&A
Forced
Planned
16%
1%
3%
15%
2%
2%
14%
2%
2%
13%
1%
2%
12%
1%
2%
9%
0% 1%
12%
15%
15%
Telecom
Utilities
Energy
25
39
50
43
31
50
64
44
29
Number
of companies
in top 2,500 104
165
234
274
205
350
499
357
312
Number
of turnover
events
12%
11%
10%
10%
9%
8%
Materials Information Consumer Financial Industrials Consumer
technology staples
services
discretionary
As % of companies in the top 2,500 in each industry
Note: “Consumer
discretionary” includes
automobiles and
components, consumer
durables and apparel,
consumer services, media,
and retailing.
• The telecom and utilities industries had the highest turnover rates in
2012 (both at 24 percent), closely followed by energy (21 percent).
These same three sectors had the highest turnover rates in 2011.
As in previous years, the telecom and utilities industries stand out for
high levels of forced turnover (7 and 5 percent, respectively, in 2012).
• The industry with the lowest turnover rate in 2012 was consumer
discretionary, at 9 percent.
40
Strategy&
In 2012, Japanese companies promoted the highest share
of insiders, and companies in Brazil, Russia, and India
the lowest
Exhibit 16
Incoming CEO status — insider vs. outsider
83
57
22%
37%
78%
U.S./
Canada
63%
Western
Europe
32
3%
97%
Japan
53
14
27
34
38%
36%
44%
32%
62%
Other
mature
64%
China
Breakdown by company HQ region: 2012
56%
Brazil,
Russia,
India
68%
Other
emerging
Outsider
Insider
Note: “Other mature”
economies include
Argentina, Australia,
Bahrain, Chile, Cyprus,
Czech Republic, Hong
Kong, Hungary, New
Zealand, Poland, South
Korea, etc.
“Other emerging”
economies include Egypt,
Kazakhstan, Mauritius,
Mexico, Mongolia, Nigeria,
Saudi Arabia, South Africa,
Turkey, etc.
“Mature” countries are
defined as per the U.N.
Development Programme
2012 ranking of countries
with “very high human
development” (human
development index >0.788);
all others are “emerging”
countries.
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information.
Strategy&
41
In 2012 the apprenticeship model was most common
in Japan and least common in Europe
Exhibit 17
Apprenticeship model by region
Japan
North America
Global average
Europe
100%
90%
80%
69%
70%
Note: “North America”
includes the U.S., Canada,
and Mexico.
60%
50%
40%
35%
30%
29%
20%
15%
10%
0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Percentage of outgoing CEOs in planned turnover events
who remained or became chairman
2011
2012
“Europe” includes Austria,
Belgium, Britain, Croatia,
Cyprus, Czech, Denmark,
Finland, France, Germany,
Greece, Guernsey,
Hungary, Ireland, Italy,
Jersey, Luxembourg,
Netherlands, Norway,
Poland, Portugal, Romania,
Russia, Spain, Sweden,
Switzerland, and Turkey.
Exhibit excludes turnover
events resulting from
M&A, interims, and events
with incomplete turnover
information. Exhibit also
excludes forced turnover
events.
42
Strategy&
Methodology
This study identified the world’s 2,500
largest public companies, defined by their
market capitalization (from Bloomberg)
on January 1, 2012. Our research
team members then identified the
companies among the top 2,500 that had
experienced a chief executive succession
event and cross-checked data using a
wide variety of printed and electronic
sources in many languages. For a listing
of companies that had been acquired or
merged in 2012, we also used Bloomberg.
Each company that appeared to have
changed its CEO was investigated for
confirmation that a change occurred
in 2012, and additional details — title,
tenure, chairmanship, nationality,
professional experience, and so on —
were sought on both the outgoing and
incoming chief executives (as well as any
interim chief executives).
Company-provided information was
acceptable for most data elements except
Strategy&
the reason for the succession. Outside
press reports and other independent
sources were used to confirm the reason
for an executive’s departure. Finally,
Strategy& consultants worldwide
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, Strategy& followed
the United Nations Development
Programme 2012 ranking.
Total shareholder return data for
a CEO’s tenure was sourced from
Bloomberg and includes reinvestment
of dividends (if any). Total shareholder
return data was then regionally marketadjusted (measured as the difference
between the company’s return and
the return of the local regional index
over the same time period) and
annualized.
43
Strategy& is a global team
of practical strategists
committed to helping you
seize essential advantage.
We do that by working
alongside you to solve your
toughest problems and
helping you capture your
greatest opportunities.
These are complex and
high-stakes undertakings
— often game-changing
transformations. We bring
100 years of strategy
consulting experience
and the unrivaled industry
and functional capabilities
of the PwC network to the
task. Whether you’re
charting your corporate
strategy, transforming a
function or business unit, or
building critical capabilities,
we’ll help you create the
value you’re looking for
with speed, confidence,
and impact.
We are a member of the
PwC network of firms in
157 countries with more
than 184,000 people
committed to delivering
quality in assurance, tax,
and advisory services. Tell us
what matters to you and find
out more by visiting us at
strategyand.pwc.com.
This report was originally published by Booz & Company in 2013.
www.strategyand.pwc.com
© 2013 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further
details. Disclaimer: This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.