Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The armed services have a long tradition of carefully calibrated deference. In the US, for example, a humble one-star general only merits a ceremonial eleven-gun salute. In contrast, crews fire their guns 21 times for the president.
In the UK, a monarch can bask in the adulation implied by a 62-gun salute. So much for British understatement.
Departure announcements for chief executives also follow strict protocols. Small differences speak volumes about the terms on which a boss has parted with the board and investors. A stock of clichés tell us whether praise or blame is ringing in the CEO’s ears.
There have been plenty of departure notices to unpick lately. In the UK, furnishings group Dunelm, bookmaker Entain and garment retailer Primark have all said goodbye to CEOs since January. Over the past year or so, US corporate heavyweights including Boeing, Intel and Starbucks, have shuffled bosses.
According to Russell Reynolds, a recruitment consultant, CEO turnover hit a six-year high in 2024 across 13 key stock market indices. Political and economic disruption have played a part in reducing CEO tenures to an average of just over five years in the UK and seven years in the US, according to Spencer Stuart, another recruiter. The US’s crazy tariffs policy may set the merry-go-round spinning faster.
CEO departure notices give journalists the chance to play Sherlock Holmes. When reporters hear that a boss, aged 62, is retiring after 10 years to be replaced by the finance director, there is little to guess at. But when chief executives “step down” in vaguer circumstances, we ask: “Did they jump? Or were they pushed?”
Private investors can usefully pose the same question. An ousting at the top of an organisation may be the result of wider infighting. And a board that kicks out a CEO only months after appointing them must have made at least one bad decision.
A 2003 paper published by the New York Federal Reserve delved into the issue. Researchers led by Matthew Clayton of Rutgers University analysed almost 900 US CEO changes between 1979 and 1995. Share price volatility increased when a CEO was succeeded smoothly by a company insider, they found. It rose more sharply when the chief executive was ousted or replaced by an outsider. That pointed to strategy changes with scope to shift valuations meaningfully, the research suggested.
Oustings can be hard to spot, however. Financial PRs advise corporate clients to make announcements as anodyne as possible. Lawyers representing CEOs push for a positive send-off as part of the severance package.
In reality, the tally of unwilling to willing departures is roughly 50/50 according to one veteran City PR I know. Many bosses run out of steam or are derailed by strategic errors after a few years, he reckoned.
I suspect any company that announces a boss’s departure “by mutual agreement” is equivocating. Departure is the only outcome most CEOs can pragmatically agree to if the board and big investors are showing them the door.
“Mutual agreement” therefore features as a negative phrase in a scoring system I devised while researching this column. I claim no credit for the idea. Daniel Schauber, a journalist and data company owner, thought of it. His “push-out scores” imply deeper insight and analysis than my “valediction values”.
The latter do, however, indicate how favourable or otherwise a departure announcement is towards a CEO, as a starting point for answering the question “jumped or pushed?”
I scored 25 announcements issued by prominent US, UK and continental European companies since February 2024. Such standard words of praise as “leadership” and “significant contribution” merited a point each. Mentions of long tenure, particular achievements and “good wishes with future endeavours” also earned points.
I deducted two or four points respectively for implicit or explicit criticism, reflecting the weight their rarity gives them.
This chart demonstrates the range, top to bottom. I have shortened company names and given the CEOs surnames alone to save space:
Mark Clouse received full presidential honours in his retirement announcement last March. Campbell’s Company commended him for “[making] soup a key element of the growth strategy”. Shame on you, if you think this was a no-brainer at a company best known for its soup.
Nick Wilkinson did almost as well at Dunelm this February — UK businesses are usually more grudging with praise than US peers. There certainly seems to have been some transatlantic grade inflation in Dave Calhoun’s high score at chaotic aircraft maker Boeing last year. A diligent chair would have quelled the unseemly hyperbole. But Boeing’s Larry Kellner quit at the same time.
Further down the scale, luxury group Capri framed the departure of Cedric Wilmotte, CEO of the Michael Kors brand, unflatteringly within “expense reduction initiatives.” High fashion should look costly but high fashion bosses should not, it appears.
The lowest score was recorded by Associated British Food’s announcement concerning Paul Marchant, chief executive of its high-profile clothing retailer Primark, at the end of last month. According to the release Marchant resigned “with immediate effect” following “an allegation made by an individual about his behaviour towards her in a social environment”.
ABF chief executive George Weston was quoted as saying: “I am immensely disappointed.”
Here, at last, real, raw, human emotion had overpowered corporate guff and left it pleading for mercy. No deductive brilliance is required to know that Marchant’s career path will now be a difficult one.
jonathanbuchananguthrie@gmail.com
