Feigen Advisors, an advisory firm to CEOs of the world’s largest companies, has released its third annual New CEO Report, which profiles the new chief executives appointed to lead S&P 250 companies in 2016. The report debunks some of the commonly held assumptions about turnover at the top of America’s biggest companies while shedding light on the typical paths to the CEO position, as well as the ongoing barriers that women face in reaching the top spot in corporate America, according to the firm.
The 2016 class of CEOs comprises 23 chief executives at a diverse group of companies, including Delta Air Lines, Wells Fargo, Viacom and Tyson Foods. The group includes only three women. Collectively, these 23 CEOs lead companies with revenues of $558 billion, a market capitalization of $1.1 trillion and more than 1.3 million employees.
“The 2016 CEO Report shows that health and stability reigned at the top of America’s biggest companies last year,” said Marc Feigen, CEO of Feigen Advisors. “The average tenure of the 23 chief executives who left their companies in 2016 was 10.7 years, which is longer than what we’ve seen over the past three years, and most of those departures were due to retirement.”
The report also reveals persisting trends and key insights compiled from the past three years of data on the 81 new CEOs appointed from 2014 and 2016 to S&P 250 companies. These include:
• CEO tenure is longer than presumed: In contrast to a commonly-held belief that CEO turnover is high, the average tenure of a CEO in the S&P 250 who exited between 2014 and 2016 is nine years, demonstrating stability at the top of the country’s largest companies.
• There is still a lack of women at the top: While women make up 25 percent of senior management, according to Catalyst.org, there were just three women appointed to helm S&P 250 companies in 2016, and only six total (representing 7 percent of new CEOs) from 2014 to 2016. In contrast, eight of the CEOs appointed during this same period were alumni of PepsiCo, showing one company’s ability to produce more leaders than the entire S&P 250’s ability to promote women CEOs.
• The majority of incoming CEOs were promoted from within: Nearly nine out of 10 companies, or 88 percent, appointed their new leader from within their own ranks, another sign of health and stability. In contrast, it was more likely for a company to hire a new CEO externally when facing financial performance challenges.
• New CEOs tend to be company veterans: On average, new CEOs spend nearly 19 years at their companies prior to promotion and have deep expertise and understanding of every aspect of their business, including strategy, operations, capital management and people.
“If PepsiCo alone can produce eight of the new CEOs, then certainly the top 250 companies can produce more than six women CEOs,” said Feigen. “Not only are there too few women CEOs, but it’s a longer journey to the top for the women who do achieve the highest post: the six new women CEOs from 2014-2016 spent an average of 28 years working in their respective companies before the big promotion. In fact, these women served their companies 34 percent longer than the men who were promoted to CEO from the inside and 76 percent longer than all men who were appointed CEO during this period.”
The 2016 New CEO Report also features lessons and advice for the new CEOs on topics varying from navigating an increasingly uncertain world to the importance of being prepared for cyber-risks. The advice is given by global business leaders and influencers, including Mark Fields, CEO of Ford Motor Co.; Mervyn King, former governor of the Bank of England; Richard Clarke, former special advisor to four U.S. presidents; and Doug Hodge, former CEO of PIMCO.