The #MeToo movement has been cited as a key factor in a record number of company bosses losing their jobs last year because of dodgy behaviour.
For the first time in 2018, according to a study by PwC, more chief executives were forced out of the world’s biggest 2500 companies for ethical lapses (39 per cent) than for poor performance or arguments with their boards.
PwC said the jump reflected a combination of tightening governance standards and increased societal expectations, including new pressures for accountability about sexual harassment and sexual assault triggered by the rise of the Me Too movement.
Tighter governance standards, a zero-tolerance towards executive misconduct by company boards, the rising influence of activists and more aggressive intervention by regulatory and law enforcement agencies have also played a part, PwC believes.
Last year, forced departures accounted for 20 per cent of CEO turnover, which hit a record 17.5 per cent — up from 14.5 per cent in 2017 and above the 10-year average.
Turnover rose significantly in every region, except China. It was highest — at 21.9 per cent — in a disparate grouping of “mature” countries that included Australia.
Communication services companies led the way, accounting for 24.5 per cent of departures, followed by mining companies (22.3 per cent) and energy companies (19.7 per cent).
The PwC study also found that CEOs who serve more than 10 years — most of them with North American companies — generally outperformed their shorter-serving peers.
Its research shows that the median regionally adjusted annual increase in total shareholder return for long-serving bosses over the 2004-18 period was 5.7 per cent — 3.3 percentage points higher than for other CEOs.
Long tenures are more common in the North America, with about 30 per cent of the region’s bosses serving more than 10 years. That compares with 19 per cent for Europe, 10 per cent for Brazil, Russia, and India, and 9 per cent for Japan.
Among PwC’s other findings:
- Women accounted for 4.9 per cent of incoming CEOs in 2018, down from a record 6 per cent a year earlier.
- At 17 per cent, outside appointments to CEO roles were the lowest since 2007:
- Over the past three years, 48 per cent of long-serving CEOs either remained as board chair or assumed the role at the time of the succession: