Study: CEO Departures Hit Record in 2006
A record number of U.S. corporate bosses have left their jobs this year, in part
reflecting the widening stock options backdating scandal, according to
new data.
A total of 1,347 chief executives at U.S. companies,
including 113 in November, departed in the first 11 months of
this year, compared with the former record of 1,322 CEO
departures in all of 2005, according to outplacement firm
Challenger, Gray & Christmas.
The tally includes chief executives who stepped down,
retired, were fired, or, in a few cases, died.
The growing stock options backdating scandal "is spreading
like a virus," according to Challenger, Gray head John
Challenger, and has contributed to the turmoil.
Challenger said 15 CEOs have lost their jobs over
questionable options practices in the past two months alone,
and that figure "may be just the tip of the iceberg."
In total, 54 high-ranking executives -- including CEOs,
chief financial officers and general counsels -- have stepped
down amid probes into options awards, according to the
Challenger, Gray tally.
Backdating is the practice of manipulating the grant date
of a stock options award to give the recipient the chance to
reap extra profits.
Some of the highest-profile casualties of options probes
are ex-UnitedHealth Group CEO William McGuire,
whose last day on the job was Thursday, and former KB Home
chief Bruce Karatz, who resigned last month.
In some of the most recent shake-ups, Affiliated Computer
Services said CEO Mark King, as well as the
company's financial chief, had resigned because of their role
in improper options awards.
Also, Trident Microsystems Inc. recently said its
CEO had stepped down following an options probe, as did HCC
Insurance Holdings.
The health care industry has seen the biggest CEO turnover
this year, with 214 departures, according to the Challenger,
Gray data. Other industries with many CEO changes include the
computer business, with 148, and financial services, with 113.
CEOs are richly rewarded for their work, but their tenure
at the top can be short.
Just this year, big companies such as Pfizer ,
Bristol-Myers Squibb ,Viacom and Ford Motor have named new CEOs. Those changes were not
linked to questions over stock options practices.
The growing CEO turnover in corporate America shows that
investors and boards of directors are putting more pressure
than ever on corporate chiefs to deliver results, said Mary Ann
Jorgenson, a partner at law firm Squire Sanders & Dempsey who
advises CEOs and boards.
The culture in the boardroom is not as patient as it used
to be," she said. "It's not docile. It's not forgiving."
