Recession jitters drive FTSE chiefs out of the top job
Chiefs of the UK’s top companies have been exiting their roles at a doubly quick pace over the last year, driven by boards trying to insulate their firms from the economy being whacked by rising prices and interest rate hikes with a change in leadership, a new study out today shows.
Some 38 chief executives of Britain’s largest companies on the FTSE 350 index left their roles in 2022, more than double the 18 that departed in 2021, according to advisory firm Russell Reynolds Associates.
The uptick in CEO turnover has been engineered by a “greater level of change and instability” in the UK economy, Luke Meynell, managing director of Russell Reynolds Associates, said.
Departures from the FTSE 350 contributed around over one in five of every exit last year globally, while 13 FTSE 100 companies changed leadership. FTSE 250 companies CEO exits climbed to 25 from 10.
Britain has been on the edge of a recession for nearly a year due to consumers and businesses being hit by rapidly rising prices and the Bank of England hiking interest rates to tame them.
Consumer spending has slowed, while firms are being hamstrung by swelling costs, pulling back UK economic activity.
“UK companies have experienced a turbulent few years, with the economy recovering more slowly from the pandemic than others in the G7 – and the nation having faced additional challenges from supply chain issues created by Brexit,” Meynell added.
Bank Governor Andrew Bailey and co have jacked up borrowing costs eleven times in a row to 4.25 per cent and expected to send rates to a peak of five per cent.
Those factors have squeezed companies, with a separate report out today from EY-Parthenon revealing profit warnings among UK listed firms have hit their highest level since the early days of the Covid-19 crisis.
As a result, chief executives may have been at greater risk of losing their job as boards bid to help steady the ship amid the economic turbulence.
Most top forecasters have canned their recession forecasts for the UK this year, but growth is tipped to be pretty sluggish.
In 2022, Jonathan Akeroyd took the helm of FTSE 100 listed luxury fashion retailer Burberry from Marco Gobbetti. Pete Redfern was also replaced by Jennie Daly at house builder Taylor Wimpey.
Globally, the number of CEOs that moved on jumped nearly a third to a five year high of 175 in 2022 from 133 in 2021, Russell Reynolds Associates said.
That increase was mainly driven by change at the top of US, UK and Australian firms. America has been toying with a recession for about a year as well.