Leadership Trends and Executive Tenure Across Sectors
The percentage of CEOs promoted from within as opposed to being an external appointment is fairly consistent, with only Energy and Markets going above 60% and the others hovering at between 45% and 58%.
The percentages reflect board moves in H1 2024, with the low number in Markets and Energy explaining their outlier status. We anticipate fewer internal appointments during periods of low board activity, as seen in H1 2024, and more external appointments during stronger economic growth.
of CEOs promoted from within the company, as NASDAQ identified.
of CEOs promoted from within the company, as FTSE identified.
The proportion of CEOs that were promoted internally was pretty much identical between companies on the two indices.
There is no clear correlation between the length of average CEO tenure in various sectors and the proportion of internally promoted CEOs. While sectors like Retail Financial Services, Real Estate, Markets, Insurance, and Energy boast average tenures over 10 years, this may be attributed to more generous remuneration packages rather than other factors. Notably, CEO tenure is significantly longer for NASDAQ companies at 14.2 years compared to 9.8 years for FTSE 350 companies. This discrepancy suggests that NASDAQ firms may offer better compensation or place a higher value on experience than their FTSE 350 counterparts.
In the Financial Services sub-sectors analyzed, Global Banking has no executives with tenures over 10 years, while the others show a mix of experience.
Markets and Wealth and Asset Management skew younger, with around 75% of executives having tenures of 10 years or less. Retail Financial Services displays the greatest diversity in age and experience. Despite Financial Services' reputation for executive burnout, the balance of youth and experience across most sub-sectors is encouraging, suggesting a healthy mix of fresh ideas and seasoned leadership that all executive teams should strive for.
Software and Tech Services firms often have younger, less experienced executive teams, though 1% still have executives with over 20 years' tenure, likely founders. This highlights the need for a balance of new ideas and experience. In Deep Tech, there's greater diversity in age and experience, as these executives often have specialized knowledge, with many having transitioned from researchers to leaders.
The charts suggest that while youthful innovation is important, technology firms recognize the value of experience. Younger firms may need to hire experienced talent in areas like finance, and succession issues could arise as tech specialists age out.
