CEO Departures at Highest Levels in Over 20 Years
In an unprecedented trend, chief executive officers (CEOs) are stepping down from their positions in record numbers. January 2025 set an all-time high, with 222 CEOs stepping down from their posts. This number is 14% higher than last year at the same time – and the highest number since the tracking metric was implemented in 2003. The results are on the heels of 2024’s record number of CEO departures, with 2,221 executives leaving their posts, according to the executive recruiting firm of Challenger, Gray and Christmas. The annual data for CEO departures in 2024 marks a 16% increase from the previous year – surpassing the prior record of 1,914 exits in 2023.
Economic and Political Turbulence: A Catalyst for CEO Departures
The surge in CEO resignations is closely linked to the current economic and political climate. The implementation of sweeping tariffs by President Donald Trump on imports from major trading partners such as Mexico, Canada, and China has led to heightened global trade tensions. The U.S. election was a mandate for change, and new tariffs are ushering in a new world order. Uncertainty and unpredictability has made leadership difficult, as economic challenges have already begun to take effect.
But chief executives specialize in leading through change. Uncertainty is part of the job description when you sit in the top spot. Still, the unpredictability around economic trade decisions has caused ripple effects that have changed the game for many leaders. The resulting market volatility and economic uncertainty have created challenging environments, prompting many CEOs to reconsider their options.
Investor pressure has also played a pivotal role in the uptick of CEO departures. Activist investors, who acquire significant stakes in companies to influence management decisions, have become increasingly assertive. In 2024, approximately 27 CEOs from companies targeted by activist campaigns stepped down, exceeding the four-year average and highlighting the growing effectiveness of these investors in driving leadership changes. Barclay’s reports that 243 activist campaigns were launched worldwide in 2024, the highest since 2018.
Sector-Specific Trends: CEO Resignations in Technology and Beyond
While the increase in CEO resignations spans various industries, the technology sector has experienced a notably higher turnover rate. In 2024, 40 tech CEOs left their positions, a 50% increase compared to the six-year average, underscoring the sector’s heightened vulnerability to leadership changes amid rapid technological advancements and market pressures.
Private Equity is also playing a role in influencing CEOs. In the retail sector, store closures are expected to spike to 15,000 in 2025 – driven, in large part, by private equity investors that can’t find returns in the marketplace. When money doesn’t materialize, some PE firms file for bankruptcy, where the CEO role must transform – or sometimes disappear, when a company shuts their doors. Private equity firms played a role in 56% of the largest corporate bankruptcies in 2024.
Additional Factors Driving CEO Resignations
Beyond economic and investor-related pressures, other factors have contributed to the rise in CEO departures:
- Personal Conduct and Ethical Standards: Increased scrutiny over personal conduct has led to several high-profile resignations. For instance, Kroger CEO Rodney McMullen resigned following a board investigation into personal conduct inconsistent with the company’s ethics policy. Kroger is embroiled in an ongoing lawsuit after its failed merger attempt with Albertsons, which happened on McMullen’s watch.
- Strategic Misalignment and Performance Issues: CEOs facing challenges in executing company strategies or underperformance have also stepped down. The inability to adapt to changing market conditions or to meet shareholder expectations can lead to leadership changes. Pat Gelsinger at Intel resigned in December 2024, after four years in the role. Intel’s stock price was down 61% at the time.
- Massive Payouts Despite Market Results: In late 2024, Peter Rawlinson resigned as CEO of Lucid Group, an electric car maker. His total compensation in 2022 was approximately $379 million – making him the highest-paid CEO in the auto industry for that year. Despite some impressive products, Lucid suffered a $2.7 billion loss on a cash burn of $3 billion last year. Upon tendering his resignation, Rawlinson transitioned to an advisory role (payment of $1.44 million per year) plus a $2 million stock grant.
Implications for Corporate Governance
The record-high CEO turnover has significant implications for corporate governance and succession planning. Companies are increasingly appointing interim CEOs, with 19% of new chief executives in January 2025 being interim appointments, compared to 6% in January 2024. This trend reflects the challenges organizations face in finding suitable long-term leadership amid uncertain economic conditions. But also, it’s a reminder that anyone can be replaced.
The heightened turnover and increase in interim CEOs are emphasizing the need for robust succession planning. The development of internal leadership pipelines to ensure organizational stability is crucial, amidst the current economic uncertainty. The CEO role is the ultimate leadership responsibility, as leaders must balance between the needs of multiple stakeholders. However, with the amount of change in the market today, the demands of the CEO role are shifting rapidly – and many in the top spot are choosing to move on.