Interpac Business and Migration Solutions Melbourne Australia

November 26, 2009

The number of chief executive departures in Australia soared in 2008, with most forced terminations in the financial sector or property trusts, research shows.

There were 50 chief executive officer (CEO) departures among ASX200 companies in 2008, compared to 41 in 2007, showing boards were being bolder in their decision making, consultants Booz & Company said.

It was the highest turnover rate since Booz began its CEO succession study in 2000.

Twenty of the departures were based on performance issues, or forced, while the others were either planned or the result of mergers.

Despite Australia's relative strength through the global financial crisis, the 22.3 per cent local CEO turnover rate was significantly higher than any other country, with Japan the closest at 16.9 per cent.

North America's turnover rate was 14.8 per cent and Europe's was 15.1 per cent.

Booz principal Phil Mottram says it may seem surprising that the rate was higher in Australia, but a closer look at the statistics showed most turnover was in the financial and property sectors.

Both sectors were "at the pointy end of the credit crunch", he said.

Financials and listed property trusts accounted for 17 CEO departures, 10 of which were performance related.

Mr Mottram expects to see high rates of CEO turnover continue in the financial sector in 2009.

But across the board transitions were expected to slow "suggesting companies had stabilised their course as the worst of the crisis passed".

The lower overseas turnover could be attributed to global companies seeking stability through tough economic times, he said.

But it may also be that Australian companies were making tougher decisions on senior leadership.

"We could argue that Australian boards have been gutsier in relation to their CEO turnover decisions, that they're not averse to making the tough decisions if they need to, compared to other regions," Mr Mottram said.

Externally appointed CEOs accounted for 55 per cent of those who departed for performance reasons.

Australian boards are increasingly appointing internal candidates to CEO positions, accounting for 74 per cent of appointments in 2008, the research shows.

(Source from Theage.com.au)