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CEO turnover is picking up again

Myles Udland
·Anchor
·3 min read
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Friday, February 5, 2021

This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

After taking a pause during COVID, CEO departures are on the rise again.

In one of the last Morning Brief’s we published in 2020 before the COVID-19 pandemic took over as the year’s big storyline, we highlighted a surge in CEO turnover.

At the time, a still-growing economy and a roaring stock market served as the backdrop for an executive class ready to move on to another challenge. According to data from staffing firm Challenger, Gray & Christmas, a record 219 chief executives left their posts in January 2020.

And then things changed.

Corporations and executives were forced onto a war-time footing in the spring of 2020, focused on keeping the lights on as they weathered an unprecedented economic shock. Growth and expansion were out, liquidity and survival were in.

Former Disney (DIS) CEO Bob Iger, for example, surprisingly stepped down in late February 2020. By April, however, the New York Times reported Iger, “has effectively returned to running the company.” Best laid plans were blown up in the depths of the COVID-19 crisis.

But with companies now able to start seeing over the hill to the other side of the pandemic, one of last year’s big corporate trends appears to be picking back up.

This week we’ve seen two major chief executives — Jeff Bezos at Amazon (AMZN) and Ken Frazier at Merck (MRK) — announce that they’d be relinquishing the CEO job and moving into a role as executive chairman at their respective companies.

Frazier’s departure from Merck brings to an end a decade-long run atop the pharma giant he joined almost 30 years ago. Frazier is also one of the few Black chief executives at a Fortune 500 company, and his departure serves as another reminder that Corporate America has done an embarrassing job developing and promoting minority talent through its ranks.

Bezos’ departure from the tech giant he founded in 1994 marks the end of an era for someone influential, tech analyst Ben Thompson called, and “arguably the greatest CEO in tech history, in large part because he created three massive businesses, all of which generate enormous consumer surplus and enjoy impregnable moats.”

Back in February 2020, we argued the departure of chief executives was a natural part of what was then a mature business cycle.

Brian Belski, a strategist at BMO, wrote last year that the needs of a post-financial crisis CEO were to “preserve and protect.” The next era, Belski said, would require a leader focused on growing, not preserving. And we’d suggest that the COVID-related economic interruption increasingly looks like just that — an interruption.

And on the other side of the pandemic still lies a new economic cycle that is likely to reward companies with the traits that 2020 seemed to be asking for: growth and investment instead of preservation and survival.

And with a generation of CEOs having just managed through the most unprecedented crisis of their careers, expect more top executives to see the next few months as the right time to step aside.

By Myles Udland, a reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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