There has been a record rise in the turnover of CEOs, according to a study of FTSE 350 firms. The number of bosses departures among the UK’s top companies more than doubled over the last year, as boards attempted to insulate their firms from rising prices and interest rate hikes with a change in leadership.
Some 38 chief executives of Britain’s largest companies left their roles in 2022, double of the 18 that exited in 2021, according to advisory firm Russell Reynolds Associates. The uptick in CEO turnover has been engineered by a “greater level of change and instability” in the UK economy, Luke Meynell, managing director of Russell Reynolds Associate, said.
Departures from the FTSE 350 companies contributed to just over one in five of every exit last year, while 13 FTSE 100 companies changed leadership. FTSE 250 companies CEO exits climbed to 25 from 10.
Notable exits last year include Jonathan Akeroyd taking the helm at FTSE 100-listed luxury fashion retailer Burberry from Marco Gobbetti, and Pete Redfern being replaced by Jennie Daly at housebuilder Taylor Wimpey. Nick Read also departed as Vodafone’s CEO last year.
“UK companies have experienced a turbulent few years, with the economy recovering more slowly from the pandemic than others in the G7 – and the nation having faced additional challenges for long periods from supply chain issues created by Brexit,” Meynell said.
“The challenges which CEOs must now address have multiplied considerably. Accordingly, boards worldwide will be considering carefully whether they have the right person in place at the top,” he added.
UK firms have been hit by a slowdown in consumer spending and hamstrung by swelling costs. Inflation surprisingly hit 10.1 per cent in March, down slightly from February’s 10.4 per cent, but remains much higher than in the rest of the rich world.
Bank of England governor Andrew Bailey and co had increased borrowing costs 11 times in a row to 4.25 per cent and last week there was a further increase taking it to 4.50 per cent. These factors have squeezed companies, with a separate report from EY-Pantheon revealing profit warnings among UK listed firms have hit their highest level since the early days of the Covid-19 crisis.
As a result, chief executives may have been at greater risk of losing their job as boards bid to help steady the ship amid the economic turbulence. Many top forecasters have since restricted their recession warnings for the British economy this year, but growth is still tipped to be sluggish.
Meanwhile, many firms are shrugging off economy fears to focus on growth. Small businesses are turning their attention away from worrying about whether the country will slip into a recession to concentrate on growth, a new survey out last week showed.
Confidence among the country’s small firms – which drive output – rose sharply from its depths at the end of last year, according to the Federation of Small Businesses (FSB). While still in negative territory at minus 2.8 points, the FSB’s confidence index shot up from minus 45.8 points in the final three months of last year. The findings are the latest set of data to indicate the UK will probably dodge a recession this year.
Martin McTague, national chair at the FSB, said the “data shows that small firms may be about to turn the corner and rebound after the pandemic and the energy crisis, with confidence recovering alongside improved optimism for the second quarter.” Separate research from consultancy BDO found worker shortages are slowing business growth. “More than two fifths (44 per cent) of these businesses say their number one workforce issue is the cost of hiring,” the firm said. (The writer is our foreign correspondent based in the UK)