Why did CEO departures in the S&P 500 increase in 2024?

CEO departures across S&P 500 companies increased notably in 2024 due to a convergence of intensified board scrutiny, compressed strategic timelines, and growing stakeholder impatience with underperformance. Boards that had extended patience during the post-pandemic recovery period reached a collective inflection point, accelerating leadership changes they had deferred. The sections below examine the specific forces behind that shift and what boards can do to manage leadership transitions more effectively.

What drove the spike in CEO exits across S&P 500 companies?

The rise in CEO departures across S&P 500 companies in 2024 was driven primarily by a combination of post-pandemic performance reckonings, activist investor pressure, and boards reassessing whether their current leadership was equipped to navigate a more demanding operating environment. After years of tolerating uncertainty, boards moved decisively when strategic results failed to materialise.

Several intersecting forces made 2024 a particularly active year for executive leadership changes. Inflation, interest rate volatility, and geopolitical disruption created conditions in which strategic missteps became harder to absorb. Boards that had extended goodwill during the disruption of 2020 to 2022 found themselves holding leaders accountable for results that had not arrived.

Activist shareholders also played a meaningful role. With institutional investors increasingly focused on long-term value creation and ESG accountability, boards faced external pressure to act when CEO performance fell short. In several high-profile cases, leadership transitions were not initiated from within but demanded from outside the boardroom.

Technology sector volatility added further weight. Companies undergoing AI-driven transformation required leaders with a different capability profile than those who had been appointed in earlier cycles. Where boards concluded that the incumbent lacked the strategic agility to lead through that transition, departure became the logical outcome.

How does board pressure contribute to CEO departures?

Board pressure contributes to CEO departures when directors lose confidence in a leader’s ability to execute strategy, manage risk, or maintain stakeholder trust. This pressure rarely surfaces suddenly. It builds through a pattern of missed targets, strategic drift, cultural concerns, or a breakdown in the working relationship between the CEO and the Chair.

The board’s role is to hold the CEO accountable, and when that accountability function is exercised rigorously, departure becomes the natural consequence of sustained underperformance. In well-governed organisations, this process is structured and deliberate. In poorly governed ones, it is reactive and often damaging to the organisation’s continuity.

The relationship between the Chair and the CEO is the most consequential dynamic in this process. When that relationship deteriorates, it rarely recovers. A Chair who has lost confidence in the CEO will, in time, bring that view to the full board. Once board consensus forms around a leadership change, the question shifts from whether to act to how to manage the transition.

It is worth distinguishing between boards that exercise legitimate governance oversight and those that intervene in operational matters beyond their remit. Excessive board interference in day-to-day management can itself create conditions that push a capable CEO toward resignation. Effective governance requires clarity of roles as much as it requires accountability.

What’s the difference between a planned and an unplanned CEO departure?

A planned CEO departure is one that the board and outgoing leader have anticipated, prepared for, and managed within a structured transition process. An unplanned departure is one triggered by sudden resignation, dismissal, a health crisis, or an external event, where no transition infrastructure exists. The distinction matters because unplanned exits carry significantly higher strategic and reputational risk.

Planned CEO departures

In a planned transition, the board has identified successor candidates, aligned on the leadership profile required for the next strategic phase, and managed the handover in a way that preserves institutional knowledge and stakeholder confidence. The outgoing CEO typically plays a constructive role in the process. Timelines are agreed in advance, and the organisation communicates the change with clarity and purpose.

Planned departures are the product of governance discipline. They do not happen by accident. They require the board to have engaged seriously with succession as an ongoing governance responsibility, not as a task to be addressed when departure becomes imminent.

Unplanned CEO departures

Unplanned departures expose the organisation to a range of risks: market uncertainty, internal leadership vacuums, loss of strategic momentum, and reputational damage if the circumstances of departure become public. Boards that have not maintained a live succession plan are forced to make critical leadership decisions under pressure, with limited time and often limited information about the readiness of internal candidates.

The consequences extend beyond the transition itself. An organisation seen to be caught unprepared by a leadership change signals governance weakness to investors, regulators, and talent markets alike. Recovery from that perception takes time and consistent performance to rebuild.

Why are CEO tenures getting shorter at large companies?

CEO tenures at large companies are getting shorter because the pace of strategic change has accelerated while boards’ tolerance for underperformance has compressed. Leaders are expected to deliver results faster, navigate more complex stakeholder environments, and adapt to technological disruption without the extended runway that previous generations of CEOs were afforded.

The average tenure of a large-company CEO has declined steadily over recent decades. Several structural factors explain this trajectory. Boards are more active and better informed than they were a generation ago, which means performance gaps are identified earlier. Institutional shareholders have grown more willing to signal dissatisfaction publicly, which creates political pressure on boards to act. And the complexity of the CEO role itself has increased, raising the probability that any given leader will reach the limits of their capability within a shorter timeframe.

There is also a cultural dimension. The expectation that a CEO will serve for a decade or more is no longer the default assumption in most large organisations. Boards appoint leaders for a defined strategic phase, and when that phase concludes or the strategy pivots, a leadership change is treated as a natural governance decision rather than a failure.

Shorter tenures are not inherently problematic if they are managed well. The risk lies in organisations that cycle through leaders without building the governance infrastructure to manage transitions effectively, creating instability that compounds with each successive departure.

How does poor CEO succession planning increase turnover risk?

Poor CEO succession planning increases turnover risk by leaving the board without viable internal candidates, forcing rushed external searches, and creating conditions in which the wrong appointment is made under pressure. When succession is treated as an event rather than a process, the organisation is perpetually unprepared for leadership change.

The absence of a credible succession plan also affects the incumbent CEO’s position. If the board cannot identify a capable successor, it may retain an underperforming leader longer than is strategically sound simply to avoid the disruption of an unmanaged transition. This dynamic serves neither the organisation nor its stakeholders.

Conversely, when succession planning is embedded in the board’s governance agenda, it produces several compounding benefits. Internal candidates are identified and developed over time, which reduces dependence on external searches and preserves institutional knowledge. The board maintains clarity about the leadership profile required for the next strategic phase, which makes the appointment decision more rigorous when it arises. And the organisation signals to investors and regulators that leadership continuity is a governance priority, not an afterthought.

The most common failure mode is treating succession as a confidential document that is filed and forgotten. A succession plan that is not regularly reviewed, tested against evolving strategic requirements, and updated as the internal talent landscape shifts provides little genuine protection when leadership change occurs.

What should boards do differently to manage CEO transitions?

Boards should treat CEO succession as a continuous governance responsibility, not a reactive process triggered by departure. The most effective transitions are those where the board has maintained a live succession plan, assessed candidate readiness at regular intervals, and aligned on the leadership profile required for the organisation’s next strategic phase well before any transition becomes necessary.

Several specific practices distinguish boards that manage transitions well from those that do not:

Begin succession planning at appointment. The day a new CEO is appointed is the appropriate moment to initiate thinking about their eventual successor. This is not a pessimistic posture; it is the governance discipline that separates prepared boards from reactive ones.
Maintain a living succession document. The succession plan should be reviewed at least annually and updated to reflect changes in strategy, internal talent, and the external leadership market. A static document provides false assurance.
Assess both internal and external candidate readiness. Boards that rely exclusively on internal pipelines risk being caught without viable options if circumstances change. A rigorous process evaluates internal candidates objectively while maintaining awareness of the external talent landscape.
Align the board on the future leadership profile. Succession discussions are also strategy discussions. The qualities required in the next CEO reflect the board’s view of where the organisation needs to go. Building that consensus in advance prevents the kind of fractured decision-making that produces poor appointments.
Separate succession governance from the CEO’s own influence. While the incumbent CEO has a legitimate role in developing internal talent, the board must own the succession process independently. Over-reliance on the CEO’s preferences introduces bias and reduces objectivity.

The transition itself should be managed with the same rigour applied to any significant strategic decision. Communication to stakeholders, handover of institutional knowledge, and the onboarding of the incoming leader all require deliberate governance attention.

How The Board Practice supports CEO succession planning

The Board Practice works directly with boards and Chairs to build the governance infrastructure that makes CEO transitions manageable, whether planned or unexpected. The firm’s approach to CEO succession planning is grounded in the principle that succession should begin on the day of appointment, treating the process as a living governance responsibility rather than a contingency exercise.

Engagements are structured to deliver:

A clearly defined future CEO success profile aligned with the organisation’s long-term strategic direction
An objective assessment of both internal and external candidate readiness, drawing on an independent external perspective
Structured board alignment on the leadership capabilities required for the next strategic phase
A succession plan that functions as an active governance document, reviewed and updated as strategic circumstances evolve
A coordinated process that involves the right stakeholders at the right stages, with rigour and confidentiality maintained throughout

The firm’s methodology has been refined across more than 120 board-level engagements spanning large listed corporations, state-owned entities, and international organisations. That depth of cross-industry and cross-cultural experience means the process is calibrated to the specific dynamics of each board, not applied from a generic template. Boards that take board effectiveness seriously recognise that leadership continuity is inseparable from long-term organisational resilience. If your board is ready to treat CEO succession as the governance priority it deserves to be, contact The Board Practice to begin the conversation.