First Quarter and March Executive Turnover Totals Reach Turning Point?

As March has come to an end and the first quarter of 2011 is behind us, the United States economy appears to have turned a corner. Executive turnover has seen a real jump in the overall totals in March 2011 for the first time in over three years. This jump coincided with the significant drop in United States unemployment and the continuing growth in the number of jobs being created. According to the Bureau of Labor Statistics which released March’s latest employment figures,

Nonfarm payroll employment increased by 216,000 in March, and the unemployment rate was little changed at 8.8 percent, the U.S. Bureau of Labor Statistics reported … Job gains occurred in professional and business services, health care, leisure and hospitality, and mining. Employment in manufacturing continued to trend up.

Not enough time has gone by, however, to predict these specific positive changes in the economy will continue. The possibility for new shocks to the economy such as oil prices, commodity prices, wars and unrest abroad as well as other unforeseen events continue to restrain possible growth in the overall economy and to make some investors weary.

The last four years have seen continuing dramatic declines in executive turnover and large increases in overall unemployment. While executive turnover jumped significantly in March, the totals for the first quarter of 2011 were far more sanguine and actually declined from the same quarter in 2010. When the 2011′s first quater turnover numbers are compared with the previous fourth quarter of 2010, however, the number totals were quite different and far more positive.

Liberum contends the slow level of executive turnover over the last number of years relates to the fact that corporate boards have been reluctant to change top leadership during tough economic times except in situations where the firm in question has performed so poorly that a top executive change was essential or if a major strategic change change in strategy was needed. Below are some illustrative statistics of the declining turnover in top executive ranks of public companies. As we entered the new year, we finally saw some positive news with regard overall employment in the US Economy.

Liberum expects that as the economy continues to recover, the level of executive turnover will continue to rise. Both the pent up demand for new top executives and the possibilities for new job opportunities will account for growing executive turnover. Also boards will be more willing to make changes as the economy continues to grow.

Below is a simple chart outlining the quarterly declines as registered through Liberum’s Management Change Database for 2008 through 2011 (first quarter) for CEO, CFO and overall C-level turnover. The first quarter of 2011 dramatically illustrates the recent change in turnover when the totals are compared to the previous fourth quarter of 2010. The trend line is beginning to change.

Investors should keep a close eye on what happens with executive turnover during April and May.

2nd Quarter Executive Turnover Remains Slow - Inkling of Shift Arises

Executive turnover in the second of quarter of 2010 continues to decline as the financial crisis and the related recession still impact executives at companies large and small. While overall worker employment has remained a serious problem, companies have done little to change top executives during the economic crisis. This is not to say there have not been major executive changes at public companies but rather the totals have been lower than in the past. Investors need to keep on top of executive changes as a way to monitor their investments or investments they might be considering.

Second quarter 2010 CEO and CFO overall changes both dropped 16% when compared with the second quarter totals for 2009. Overall C-level changes (defined by Liberum as covering board of directors, CEOs, CFOs, COOs, CIOs, presidents, EVPs, SVPs down to VPs) for the second quarter of 2010 dropped a whopping 37% when compared with the second quarter of 2009. The drop in C-level changes for the second quarter of 2010 was much smaller when compared with the first quarter total for 2010 - the drop was only 7%. The percentage drops for CEO and CFO changes for the second quarter were also much smaller when compared to the first quarter of 2010 than the totals for the first quarter of 2009. Below are three separate graphical representations of the quarterly change totals for CEO, CFOs and C-level executives.