November Continues Growth Trend in Executive Turnover

Liberum’s executive turnover data for the month of November has continued to show growing turnover within the executive ranks similar to what we have seen for most of previous months this year. This trend was a complete reversal of what we saw for the previous two years. November’s increase in executive turnover took place while we saw a positive trend with regard to the number of people filing new unemployment claims and, even more significantly, the economy has actually generated more jobs. This is not say we are out of the woods with regard to overall employment and the economy but more positive employment signs continue to show up. In early December, the United States Department of Labor’s Bureau of Labor Statistics (BLS) announced the latest employment numbers. The official unemployment rate dropped a modest 0.4% down to 8.6%, the lowest rate since March 2009. There still remains 13.3 million people unemployed a seriously high number. The modest gain in employment is further tempered by the fact that according to BLS 315,000 people had given up looking for work. Even las t week we saw another drop in the number of people applying for unemployment.

Below Liberum has outlined in graphical format a November breakdown for CEO, CFO and overall C-level related turnover.

C-LEVEL RELATED CHANGES FOR NOVEMBER

CEO RELATED CHANGES FOR NOVEMBER

CFO RELATED CHANGES FOR NOVEMBER

For the month of November, CEO changes increased a huge 125%, CFO changes increased 111%, overall C-level (as defined by Liberum Research as board of directors, CEOs, CFOs down to corporate VPs) changes increased 94% while board of director changes declined 11% as compared with November 2010 totals. The month to month change in executive turnover on the other hand was negative for November 2011 when compared with October 2011 totals. CEO changes declined 12%, CFO changes declined 15%, overall C-level changes declined a mere 2% and board of director changes declined only 3%. Liberum expects the fourth quater of 2011 to show an increase over the same quater in 2010. Stay tuned.

2010 Continues to See Major Declines in Executive Turnover

The last four years have seen continuing dramatic declines in executive turnover. Even as the U.S. and other economies appear to be moving out of the great recession/financial crisis executive turnover has continued to decline while overall general unemployment has remained extremely high.

• For 2008 CEO turnover declined nearly 10%, CFO turnover declined 14% and overall C-level (as defined by Liberum Research as board of directors, CEOs, CFOs down to corporate VPs) turnover declined nearly 15% as compared with 2007 totals. The number totals continued to decline even more precipitously for 2009. CEO turnover declined 27%, CFO turnover declined 36% and overall C-level turnover declined 30% as compared with 2008′s already low levels. The numbers would be even more stark if compared with 2007.

• The executive turnover totals continued their dramatic decline throughout 2010. Annual 2010 CEO turnover declined 22%, CFO turnover declined 13%, C-level turnover declined 29% from 2009′s totals.

Suggested Reading - Where the Jobs Are, Forbes

David Serchuk, a reporter for Forbes, wrote a story today that examined where the jobs are and where they are not. Serchuk also referred to recent research by Liberum in which we recently predicted executive turnover would begin to rise as the economy moves through the Fall and into the Winter months.

Recommended Reading - CEOs: Same Old Faces in the C-Suite, BusinessWeek

Jena McGregor wrote a piece for BusinessWeek that examined the surprising slow level of CEO turnover throughout the current recession. While overall unemployment during the same time frame has reached decade highs most top executives with obvious exceptions have managed to stay put. McGregor summed up the situation as follows:

When Abraham Lincoln and Franklin D. Roosevelt campaigned for reelection during wartime, they told voters it was a bad idea to switch leaders midstream. Today, CEOs seem to be convincing their boards of the same thing.

The reporter turned to Liberum for some of her statistics. As reported in the piece, Liberum anticipates an increase in top level turnover as we move into the Fall. Stay tuned.

Recommended Reading - Banker Pay May Escape Obama Caps As Wall Street Eyes Guidelines, Bloomberg

Christine Harper, Pat Wechsler and Matthew Benjamin wrote a piece today for Bloomberg examining the possibility that the Obama administration may relax the compensation restrictions on the banks that have received TARP money. The restrictions were imposed by Congress after Merrill Lynch executives had received bonuses while the company was floundering and already under purchase from Bank of America. The story quotes Gary Parr, the deputy chairman of Lazard Ltd.,

“It is clear that the government’s going to have to come out with some guidelines on what will compensation be at the big institutions that have TARP,” … “There’s going to need to be something done so that there isn’t a picking off of certain institutions where they’re at a severe disadvantage to others.”

The authors of the story also referred to research by Liberum on turnover in the financial industry and how those numbers might impact Congress’ view on the compensation question. Check out the story if you are interested in executive compensation or the government bailout of the financial industry.