Report: Rate of CEO dismissals on the rise
New York City — A report released Thursday by The Conference Board said that the rate of dismissal of CEOs in the S&P 500 due to disciplinary actions has increased in recent years, while 25% of boards of directors facing a chief executive succession have opted for an outside hire.
According to the 2011 CEO Succession Report, 51 CEOs in the S&P 500 left their post in 2010, making the rate of CEO succession approximately 10%, consistent with the average number of annual succession announcements from 2000 through 2009.
“One of the most important strategic risks that a corporation must manage is the succession of its chief executive officer,” said Jason Schloetzer, assistant professor at the McDonough School of business at Georgetown University and a co-author of the report. “This is true today, more than ever, due to the recent challenges posed by a variety of economic factors.”
Key findings of the report included: The probability of CEO succession is higher following bad performance. In the 2000-2010 period, the succession rate of CEOs of poorly performing companies ranged from 21% in 2002 to 10% in 2009, while the rate for better performing companies varied from 7 to 12% (also in 2002 and 2009, respectively). Similarly, the probability of CEO succession is higher for CEOs who are at least 64 years of age. In the 2000-2010 period, their succession rate ranged from 27% in 2005 to 9% in 2008, while the rate for younger CEOs ranged from 9% in 2000 and 2001 to 13% in 2005.
During the 2000–2010 period, there was a declining trend in CEO retirements. The rate of retiring CEOs ranged from 37% of all successions in 2004 to 16% of those reported in 2008 (on average, 26% for the period). The decline in successions of departing CEOs of common retirement age suggests a corresponding increase in the number of disciplinary successions, according to the report. From 2006 through 2009, which is roughly the period of the financial crisis, approximately 80% of all succession events were associated with CEO dismissals. In more recent months, the rate of CEO retirements has increased.
In 2009 and 2010, 25% of successions involved an outsider CEO appointment, which is consistent with the upward trend in the hiring of outsiders that has been recorded in the last two decades.
Genesco acquires 59-store U.K. retailer
Nashville, Tenn. — Genesco announced Thursday that it has acquired Schuh Group, a specialty retailer of casual and athletic footwear based in the United Kingdom.
The purchase price was $159 million.
Headquartered in Scotland, Schuh operates 59 stores in the United Kingdom and Republic of Ireland, 16 concessions in Republic apparel stores and one of the U.K.’s largest online shoe websites.
"Schuh provides us with an immediate and established retail presence in the United Kingdom, a highly experienced international management team, and improved insight into global fashion trends,” said Robert J. Dennis, chairman, president and CEO of Genesco.
Dennis added that the concept is similar to Journeys in customer demographics, product offering and operating philosophy, “so it is a business we know and understand.”
Genesco operates the Journeys, Lids, Johnston & Murphy and Underground Station banners.
Chico’s names CFO
Fort Myers, Fla. — Chico’s FAS announced Thursday that it has named Pamela K. Knous as executive VP, CFO and chief accounting officer, effective immediately.
Knous, 57, was previously executive VP and CFO of SuperValu.