Why more CEOs are heading for the exit

Chief executives make big bucks, but many would rather pass the buck than lead a company in the current business climate.

- Callum Borchers

CEOs are leaving their posts at a record clip this year, according to Challenger, Gray & Christmas, which tracks executive departures. Last year, 373 public-company chiefs exited, 24% more than in 2023.

Among U.S. businesses with at least 25 employees, 2,221 CEOs bid farewell last year, the most since Challenger started tallying the departures in 2002.

Just when they had hoped their headaches might subside following the pandemic, corporate leaders have been hit with a fresh set of challenges: artificial intelligence, tariffs, the possibility of recession, and scrutiny of diversity, equity, and inclusion efforts, to name a few. Some who struggled to adapt have been shown the door. For others, a career break or retirement sounds pretty good right now.

Don't cry too hard for these burned-out bosses. Median CEO pay in the S&P 500 hit a new high of $16.4 million last year. But turnover at the top affects the rest of us.

Replacement leaders often put their stamps on organizations by installing new deputies and reorganizing teams. Even if a business is healthy—a big if, since a CEO's departure can be a sign of trouble—other people may lose their jobs in a shake-up.

A wave of new CEOs also means the fate of our delicate economy increasingly depends on people who are getting up to speed in their roles. And it's no sure thing that those willing to shoulder this responsibility are the best the business world has to offer.

Executive recruiters and coaches say the leadership issue extends beyond the C-suite. The pipeline of up-and-coming executives is thinning.

As companies reduce middle managers in the name of efficiency, junior executives' workloads can swell. Some prospects are bailing early or saying "no, thanks" to climbing the management ladder.

Happy on the sideline