Strategy&: Dutch Chief Executives safer in their seats

The percentage of changing/departing CEO’s in public Dutch organisations has in the past year declined 12%, the lowest level since 2000. Within the surveyed companies, there continues to be a trend towards more planned succession (as opposed to forced departure) of top executives. Further, external CEOs need to depart more often than internal executives. In the past year, no women took over the position of a leaving CEO, research by Strategy& shows.

Since 2000, strategy consulting firm Strategy& (formally Booz & Company) studied CEO-transitions and succession at 2500 of the largest public companies worldwide. For the identification and classification of a CEO-transition at one of these businesses, digital media and documents from all over the world are used. In the same way, Strategy& produced a supplementary study of CEO-transitions* in the Netherlands by all 50 AEX- and midcap- businesses over the past 15 years. The sources consulted included announcements of retirements and the appointment of top executives.

Less transitions at the Dutch top
From the Strategy& research, entitled Chief Executive Study 2014’, it was apparent that the percentage of transitions at top business on the Dutch AEX and AMX was at 12% significantly down on 2013, when 18% of executives left. In 2012, as many as 26% of top executives made the move. The number of CEOs that left on the basis of a fusion or takeover stayed the same over past years at 2%.

The number of Dutch CEO transitions (12%) is still lower than those of CEOs on average in the rest of the world, of which 14.3% left their position. This means that the number of transition last year reached the lowest level since 2000**. Considered over the past 15 years, the average number of CEO transitions at the top of businesses in the Netherlands – which stands at 20% – is considerably higher than the average for the rest of the world, at 13%.

More planned successions
The report also highlights that within public business boards worldwide considerably more attention is paid to planning succession of top executives. In 2014 the number of planned transition stood at 78%, while between 2000 and the end of 2002, 63% of every succession was planned. Between 2012 and 2014, the level of planned successions increased to 82%.

In the Netherlands, the percentage of planned transitions is lower. Between 2000 and 2002 there was on average in 42% of all transitions talk of a ‘planned’ transition, and between 2012 and 2014 this increased to 58% (50% in 2014). The percentage of CEOs in AEX and AMX that was forced out, because of disagreement with the board or disappointing performance, was considerably higher in the Netherlands compared to the rest of the world, at 33% and 13.2% respectively in 2014. Over the past 15 years, on average, 41 % of CEOs of the AEX and AMX were forced to leave the boardroom in the Netherlands, compared to only 25% worldwide.

Commenting on the figures, Coen de Vuijst, Partner at Strategy&, says: “The succession of CEOs in Dutch publically listed companies continues to occur with more fuss than in other countries. This shows that companies in the AEX and AMX could still better target planned successions.”

External CEOs more often let go
The worldwide study discloses that in the past ten years, external CEOs were 44% more likely to leave, at 36%, compared to CEOs that were internally promoted, at 25%. In the Netherlands the percentage was what lower: in the past ten years, 25% more external CEOs were let go than internal chief executives.

The percentage of these ‘outsider CEOs’ is higher in the Netherlands than in other countries. Since 2000, an average of 66% of incoming CEOs at Dutch publicly traded companies were insiders, compared to 77% in other countries. Last year, 60% of incoming CEOs in the Netherlands were internally promoted, compared to the 78% average worldwide.

Less female CEOs
Finally the research discloses that fewer incoming Dutch CEOs are women, compared to the worldwide figures. Last year, 5.2% of new CEOs worldwide were female, while in the Netherlands in 2014 no incoming CEO was a woman. In the past 11 years, around 1.8% of new CEOs at AEX and AMX traded companies were women, compared to 2.8% worldwide.

* To get a clear picture, a distinction between the different reasons for the departure of CEOs needs to be made.

- Forced out: whereby the CEO is made to leave, mostly due to poor performance, or because of a disagreement with the supervisory board.
- Early departure because of fusion or takeover: whereby the CEO leaves after a business is taken over or fused with another business.
- Regular departure: whereby the CEO leaves as a consequence of regular planned succession, often because of retirement or health reason or sudden death.

** Only in 2007 a comparable percentage (12%) was visible.