HP, GM CEO exits buck decline in 'C-Suite churn'

Don’t be fooled by CEO exits at Hewlett-Packard Co, General Motors Co and Sara Lee Corp this month. Chief executive officer turnover has fallen to a five- year low and may not rise until the economic outlook clears and stock-option values rebound.

There were 709 CEO changes in 2010’s first half among publicly traded companies in the US, down from 871 a year earlier and 1,482 in the first six months of 2006, according to New York-based Liberum Research, which tracks those moves.

“Boards were looking at their CEO and saying, ‘You’re not going anywhere. We’re in trouble right now and we need you to stick around and sort this out for us,’” said John Wood, chief of CEO and Board Practice at Chicago-based Heidrick & Struggles International Inc.

“C-suite churn” sliding to levels not reached since at least 2005 shows how directors prefer to shake up top management in good times and stick with “the devil they know” during a recession, said Gail Meneley, a co-founder of search firm Shields Meneley Partners in Chicago. C-suite refers to top managers with title acronyms that begin with the letter C, such as CEO, CFO, COO and CIO.

Turnover will probably stay low into 2011 as the strength of the recovery remains in question, she said.

“Boards adjust their expectations based on external factors just like they adjust based upon internal factors,” said Maggie Wilderotter, CEO of Frontier Communications Corp and a Procter & Gamble Co and Xerox Corp director. “The economy is a big external factor.”