Why are CEO Departures Rising at Successful Companies?

Even among execs who are delivering strong results for their companies, CEO turnover is rising.

In the S&P 500, CEO successions at firms in the top three performance quartiles, ranked by total shareholder return, jumped from 7% in 2024 to 12% in 2025, according to The Conference Board.

This narrowed the gap with low performers, with lower-performing companies in the bottom quartile seeing elevated turnover in 2025, though slightly lower than 2024.

Ariane Marchis-Mouren, co-author of the report and Senior Researcher at The Conference Board, said: “The rise in departures, even among strong performing companies, reflected today’s higher CEO turnover.

“Many leadership changes in 2025 reflected strategic realignment and long-term succession planning rather than immediate performance triggers.”

The changing turnover rates align with research by Boston Consulting Group (BCG) published in October, showing that the average tenure for outgoing CEOs in the first half of 2025 was 6.8 years - down from 7.7 years in the same period of 2024.

Changing CEOs at large companies

Compared to 2024, 2025 is on track to see many more successions at large-companies, according to The Conference Board.

In 2025, CEO succession announcements increased significantly among S&P 500 companies, increasing the projected annual rate to 13% as of October. This is 3% higher than what was recorded in 2024.

However, among Russell 3000 companies, CEO succession announcements remain at 11%.

Brian Campbell, Leader of The Conference Board Governance and Sustainability Centre, said: “The rise in CEO transitions among large companies signals boards’ readiness to act with greater confidence - advancing planned successions and then re-establishing a more measured cadence later in the year.”

The report also highlights that it’s becoming more common for external hires to become CEOs, with 33% of S&P 500 leader appointments being external, pushing internal promotion rates below 70% for the first time in eight years.

According to Umesh Chandra Tiwari, Executive Director of ESGAUGE, a data mining and analytics firm, said: “While most CEO appointments continue to come from within, the growing share of external hires points to a shift in how boards think about leadership succession.

“They’re increasingly prioritising strategic renewal and the infusion of new perspectives, seeking leaders who can navigate disruption, accelerate transformation and respond to evolving stakeholder expectations.”

Shortening CEO tenures

The BCG report, which includes data from a Russell Reynolds study, highlights that CEO tenures are shortening due to intensifying external pressures and rising internal expectations.

The market environment has become “increasingly unforgiving”, shaped by geopolitical uncertainty, shifting trade dynamics and rapid technology disruption, particularly from AI.

CEOs also face growing scrutiny and are held to higher standards of performance.

Judith Wallenstein, BCG Managing Director and Senior Partner who leads the consulting firm's CEO Advisory, said: “CEOs today feel enormous pressure. They have dramatically less time to show real, tangible value creation.

“In an era of shorter tenures, a strong partnership between the CEO and both their board and HR leadership increases the probability that the company will succeed.”

Chuck Gray, co-Leader of the US CEO and Board Practice at Egon Zehnder, said in The Conference Board report that exec boards are managing the challenge: “In 2025, boards appeared to take a more proactive stance - executing transitions deferred during recent volatility, initiating leadership changes to adjust strategy, and reshaping executive teams to address evolving market and stakeholder expectations.

“In this context, CEO succession serves not only as a response to results but also as a governance tool for positioning companies for the future.”