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Fewer CEOs getting the sack

TURNOVER rates for executives moving out of senior positions remained high last year despite a drop in the number of chief executive officers (CEO) forced from their posts, according to new research.

Data from management consultancy group Booz & Company, showed that CEO succession rates at roughly 2,500 large companies continued at 14.3 per cent.

The number, which has plateaued over the past five years, comes even though the number of CEOs forced out of office dropped to 3.3 per cent, marking the lowest level recorded by Booz since 2003.

The number of chairman also holding the CEO title dropped to 16.5 per cent in North America and 7.1 per cent in Europe, moving away from a decade of tradition when nearly half of the large public companies surveyed in 2000 had one individual hold the dual role.

Meanwhile, appointments from within the company to take over the helm has remained a popular trend as 80 per cent of boards turned away from appointing outsiders to run the business.

Richard Rawlinson, vice president at Booz said: “Companies that turn to outsiders tend to do worse than those that promote internally, reflecting the fact that strong companies promote from within, and recruiting an outsider isn’t a panacea for turning a company around.”

CEOs have less time to deliver results as tenure has fallen by two years to 6.3, while tolerance for poor performance has fallen after Booz found that senior figures departing on their own terms delivered a median shareholder return of six per cent, compared to a 3.5 per cent drop in return delivered by terminated CEOs.