18 September 2003
Last year was unkind to big bosses. Here’s part of the CEO casualty list for 2002: Michael Bon (France Telecom), Jean-Marie Messier (Vivendi), Thomas Middelhoff (Bertelsmann), Dennis Kozlowski (Tyco), Nobuya Minami (Tokyo Electric Power), Gerald Levin (AOL Time Warner), Ron Sommer (Deutsche Telekom). There are others.
Of the world’s 2,500 large publicly traded corporations, 253 changed chiefs. But 100 of them – nearly half - were forced out, an all-time record.
Compare this with 1995. Leaders quitting their posts then had more traditional reasons to do so: according to a Booz Allen Hamilton study, 71 percent took over the reins at another corporation, reached retirement age, faced health problems or died. This figure for last year was only 46 percent. In 2000 and 2001, 29 percent, then 27 percent of leave-takings were caused by mergers or acquisitions. This figure shrank last year to 15 percent of firms polled.
The number of directors forced out, meanwhile, shot up. Last year the figure was nearly 40 percent, while the average for the previous four years was only 25 percent. Booz Allen says everyone nowadays is copying the American model, where bosses face pressure to produce results or perish. In the U.S., beheading the boss has been the norm for some time. From their figures, Booz Allen claims that entrepreneur-based capitalism is giving way to shareholder capitalism - poor performance for shareholders being the primary reason for giving CEOs the axe.
This is particularly noticeable in sectors like telecoms and IT, where stock-exchange fiascos have left many dead or mortally wounded. Banking, insurance, energy and mass-market consumer goods have stayed comparatively healthy, letting go fewer of their CEOs.