Consulting firm Booz & Co. has issued its report on CEO succession for the past decade, which includes data gathered from the top 2,500 global companies about the 3,719 CEO turnovers between 2000 and 2009. The report notes that new CEO appointments are dominated by insiders, that the roles of CEO and chairman are more often being split, and that turnover rates are increasingly consistent regardless of geography.

Coupled with these larger trends, the study points out that CEO tenure is getting shorter and there is a lower tolerance for underperformance. In the words of Thomas Hobbes, a CEO’s lifespan might be said to be nasty, brutish, and short. Well, except for pay and perks, which this study doesn’t look at all.

In 2009, 357 companies (14.3% of the 2,500 studied) changed CEOs. The largest proportion came from planned successions, followed by dismissals, and finally by acquisitions. The rates and types of succession changes by region have converged, as have the conditions of the newly-hired CEO.

In 2000 roughly half of North American and European CEOs were also board chairmen. By decade’s end, only 16.5% of North American and 7.1% of European CEOs also held the title of chairman. Another trend is to appoint the outgoing CEO as chairman, where he or she would act as a mentor. Ironically, under this “apprenticeship” structure CEOs have underperformed non-apprenticed CEOs.

Not surprisingly, insiders far outstrip outsiders when it comes to nabbing a CEO position. Some 80% of CEO appointments are insiders, and that percentage has been fairly consistent for 10 years. Insiders produce better shareholder returns and they last longer than outsiders.

The other major focus of the study is on what it calls “compression,” the requirement to show results quickly while lacking the authority of the board chairman. The mean tenure of departing CEOs has dropped from 8.1 years a decade ago to 6.3 years in 2009. CEOs are leaving at about the same age, but they are about 2.5 years older now at the time of their initial appointment.

One other interesting finding is that telecom CEOs have much higher turnover, especially in forced turnovers, where the telecom industry fired 54% of its CEOs compared with an overall average of 36.7%. Telecom is the only industry where firings are greater than planned successions.

There are a couple of reasons for this. First, insider CEOs are picked only 53% of the time, although that number is converging toward the 80% average. More important, telecom CEOs have a shorter lifespan than other CEOs, about 5.2 years average for the past 10 years. The study notes that the fast-paced disruptive nature of the telecom business makes shareholders more demanding and that the industry is not grooming new insider leaders. Thus, the telecom companies search more widely for new CEOs, and that just doesn’t work out statistically very well.

The report includes several pages of quotes from participating CEOs full of pithy stuff like, “[I]t takes time for an organization like ours to change.” Read at your own peril.

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