Discontent With Economy Spreading to Boardrooms: 108 CEO’s Terminated in September

Turnover among the nation’s chief executive officers reached a 12-month high, as 108 CEOs announced their departures in September; among them, the heads of tech giants Yahoo! and Hewlett-Packard.   It was the sixth consecutive month with more than 100 CEO changes, according to the latest report on CEO departures released Wednesday by global outplacement firm Challenger, Gray & Christmas, Inc.

September CEO exits were up four percent from 104 in August.  It was the highest number of departures since September 2010, when 111 CEO changes were announced.

Despite the recent uptick in CEO turnover activity, the total number of departures recorded this year remains slightly below the 2010 pace.  So far, Challenger has tracked 922 CEO departures through three quarters of 2011, 4.6 percent fewer than the 967 CEO changes announced from January through September last year.

Healthcare saw the heaviest CEO turnover activity last month with 20 announced departures.  This sector has the most CEO departures for the year with 148.  That is down 10 percent from the 165 CEO changes announced by this point last year.

The next closest sector, in terms of CEO changes, is the government and non-profit sector, which has seen 116 chief executives vacate their offices this year, including eight in September.  The financial sector had 13 changes in leadership last month, bringing the year-to-date total for the sector to 96, up from 88 a year ago.

While the health care sector consistently sees the highest number of CEO changes, technology firms lead in terms of having the most blockbuster changes in the executive suite.

These firms announced 11 CEO changes last month, including Leo Apotheker of Hewlett-Packard and Carol Bartz of Yahoo! Inc., both of whom were forced out of the high-profile positions after failing to turnaround the struggling companies.  Apotheker took over the Palo Alto-based computer manufacturer after former CEO Mark Hurd was removed from the company due to a scandal involving an inappropriate relationship and misuses of funds. The company was underwhelmed with Apotheker’s performance during his 11-month stint and hired Meg Whitman, former eBay CEO and gubernatorial candidate to replace him.

Meanwhile, Yahoo! fired Carol Bartz amid falling profits and a shunned takeover bid from Microsoft. She was unceremoniously told of the board’s decision over the phone. CFO Timothy Morse was called upon to replace her.

“Interestingly, while health care providers and government and non-profit agencies continue to see the highest turnover, both have experienced a decline in the number of departures since 2010.  At the same time, CEO turnover has increased in both the tech sector and in financial services.  This is no coincidence.  Until the recent slowdown, tech and finance were the fastest out of the gate as the recession made the transition to recovery,” said John Challenger of executive search firm, Challenger, Gray & Christmas.

“Even with the recent stumbling blocks, these two sectors have their eye on growth and expansion.  Boards are quickly disillusioned with CEOs who are slow to deliver the expected results.  Neither Bartz nor Apotheker were given much time to prove themselves.”

While HP and Yahoo! Inc.’s CEOs were forced out, resignation is the most-often cited reason for CEO departures, with 271 this year, including 26 in September.  Companies have cited retirement 184 times as their leaders’ reasons for leaving.  Additionally, a total of 177 CEOs have “stepped down” this year, which means they no longer hold the CEO title, but remain with the company in some other capacity; typically as a board member or chairman of the board.