This level of executive churn is part of a longer-term trend. Last year there was more turnover among chief executives at the top 2,500 public companies than at any point since 2000 when Strategy&, a PwC consulting business, started collecting statistics. A new record is likely this year.
At the top end, Wells Fargo and HSBC are among companies worth more than US$100 billion ($158.5b) to lose a CEO this year in acrimonious circumstances.
A separate monthly tally of US chief executive turnover shows 15 per cent more at this point than last year's record, according to its compiler, Challenger, Gray & Christmas. Last month was the most active since the recession of 2008.
This is great news for headhunters but a worrying sign for the economy. Boards are more likely to act when times are getting tough. It is also a salutary lesson for top managers and some comfort to shareholders.
For some time now, the pendulum of power has been swinging against investors and towards management. Founder-led companies, in particular, have ratcheted up executive control, depriving outside shareholders of equal — or sometimes any — voting rights.
Corporate leaders look entrenched.
At fast-growing private companies such as WeWork, there is little incentive or means for directors to enforce corporate governance. Just turn up early, feed founders' fantasies of greatness and hang on for the ride as SoftBank pumps in the billions.
Yet Neumann's downfall shows the fatal flaw. Shutting out providers of capital can backfire spectacularly. Public investors are not always prepared to be the greater fool. A few weeks ago Neumann was to be CEO for life — and his wife was set to choose his successor in the event of his untimely death. He had 20 times the votes of ordinary investors.
All this insulation came to naught when investors balked at an initial public offering. First the super votes were diluted and the weird succession plan went. Then Neumann left the top job. Now WeWork is left scrabbling for more private cash.
It is not just a private phenomenon. Some public investors were rightly annoyed by the Business Roundtable of CEOs pronouncing grandly last month that the era of shareholder primacy was over. In a statement, the lobby group said chiefs should be responsible to a vague variety of "stakeholders" in business, society and the environment.
And no wonder. If you are a CEO under fire would you rather answer to a soggy stakeholder or hard-nosed activist? Fortunately, so far, trying to change the game for public companies has worked no better than for private ones.
Wenig at eBay, with hedge fund Elliott Management on the board, and Kerkhoff at Thyssenkrupp with Cevian Capital as the second-biggest investor, still had to answer to tough directors. Their departures this week showed that big shareholders can still call the shots.
Written by: Tom Braithwaite
© Financial Times
