Thursday, October 24, 2019
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CEOs are leaving at a record pace, but they’re not getting any younger
In a busy year for executive reshuffling, this week has perhaps been the most momentous.
Parker will be succeeded by John Donahoe, who is stepping down as CEO of ServiceNow (NOW) to take the top job at Nike. Donahoe will be replaced at ServiceNow by Bill McDermott, who resigned as CEO of SAP (SAP) earlier this month.
Just one rung lower on the corporate food chain, Jim Barber retired as the COO of UPS (UPS); many saw Barber as a likely successor to current CEO David Abney. Boeing's (BA) head of commercial aircraft Kevin McAllister stepped down on Tuesday, marking the biggest departure yet from the company as it continues to grapple with the fallout from two 737 MAX jet crashes within the last year.
Again, this all happened within the space of one day.
Earlier this month, executive placement firm Challenger, Gray & Christmas reported that through September, CEO departures were on pace to hit their highest level since the firm began tracking this data in 2002. Other notable chief executive departures this year include Adam Neumann at WeWork, Kevin Burns at Juul, and Devin Wenig at eBay (EBAY).
In its report, Challenger, Gray said regulatory changes and the need for new blood to continue a 10-year old economic expansion are both playing a role in driving CEO turnover. But data from executive consultancy Crist|Kolder shows that new CEOs are actually getting older, not younger, even as changes at this highest level increase.
In 2019, the average age for a new Fortune 500 CEO stood at 58.3, up from 54.1 in 2018 and 45.9 back in 2005. Said another way — over the last 14 years the average age of a newly-hired Fortune 500 CEO has increased by 12 years. That means we're still hiring from basically the same pool of potential executives, even as departures accelerate to record levels.
It's still great to be a Baby Boomer in America.
Now of course, the departure of any one executive from any one company has a unique story to tell.
Adam Neumann did not leave WeWork to retire or “pursue other interests” — he was kicked out by investors after it became apparent that his reckless tenure had gravely imperiled WeWork's chances of surviving as a business. Wenig left eBay after a long battle with activist investors. Plank departs Under Armour, a company he founded in 1996, after years of underperformance amid a shift away from performance apparel and towards athleisure.
And so on.
But turnover at the highest level of the corporate ranks comes amid stark changes in the demographic profile of the workforce. And the aging of the C-suite mirrors the aging of the overall workforce and potentially outlines why this trend isn’t going away anytime soon.
The biggest change in the labor force since the crisis has come on the oldest end of the spectrum: Employment among 55-64 year olds increasing from just over 21 million at the outset of the crisis to nearly 28 million today. Millennials are also seeing job gains, as more than 37 million people between the ages of 25 and 34 are now employed — up from around 34 million just five years ago. Meanwhile, in the middle, employment for 35-54 year olds is down overall since the crisis.
This workforce barbell dynamic suggests older, more experienced, more executively-inclined workers are hanging around for longer — while younger, less experienced, less executively-inclined workers are the only other age cohort increasing in number.
Against this backdrop, then, it makes sense that executives would naturally get older, as the only people ready to fill their roles are 20 or 30 years younger than them. And perhaps implies it could be a decade or more before millennials move into the highest ranks of Corporate America en masse.
But this also feels indicative of a broader trend we're seeing across business and politics right now. The current president is 73. The three leading Democratic candidates for president are all 70 or older. Baby Boomers have had control civically, politically, and economically in the U.S. for three decades now.
And they are clearly not yet ready to go quiet into the night.
What to watch today
8:30 a.m. ET: Durable Goods Orders, September preliminary (-0.8% expected, 0.2% prior); Durables excluding transportation, September preliminary (-0.3% expected, 0.5% prior); Initial Jobless Claims, week ended October 19 (214,000 prior); Continuing Claims, October 12 (1.679 million prior)
9:45 a.m. ET: Bloomberg Consumer Comfort, week ended October 20 (63.5 prior);
9:45 a.m. ET: Markit US Manufacturing PMI, October preliminary (51.1 prior); Markit US Composite PMI, October preliminary (51.0 prior)
10 a.m. ET: New Home Sales, September (699,000 expected, 713,000 in August)
6:45 a.m. ET: Southwest Airlines (LUV) is expected to report adjusted earnings of $1.08 per share on $5.64 billion in revenue
7 a.m. ET: Comcast (CMCSA) is expected to report adjusted earnings of 74 cents per share on $26.82 billion
7 a.m. ET: Twitter (TWTR) is expected to report adjusted earnings of 20 cents per share on $875.62 million in revenue
7:30 a.m. ET: American Airlines (AAL) is expected to report adjusted earnings of $1.40 per share on $11.95 billion
4 p.m. ET: Amazon (AMZN) is expected to report adjusted earnings of $7.55 per share on $69.70 billion
4 p.m. ET: Intel (INTC) is expected to report adjusted earnings of $1.24 per share on $18.03 billion
4:05 p.m. ET: Visa (V) is expected to report adjusted earnings of $1.43 per share on $6.08 billion in revenue
From Yahoo Finance
Yahoo Finance’s On the Move co-anchor Adam Shapiro talks to United Airlines (UAL) executives Sarah Murphy, senior vice president of United Express, and Ankit Gupta, vice president of network planning and scheduling, about the company’s strategy and future priorities. Watch the interview throughout the day on Yahoo Finance from 9 a.m. ET to 5 p.m. ET.
Tesla posts surprise 3Q profit, stock surges [Yahoo Finance]
Microsoft beats on revenue, earnings on cloud business [Yahoo Finance]
European factories axe jobs in worst round of cuts since 2013 [Yahoo Finance UK]
Target adds $50 million in payroll this holiday season [Yahoo Finance]