Rising CEO Turnover: A Concern for Strong-Performing Companies in 2025

CEO turnover has become a significant talking point in 2025. Recent data shows an upward trend, even among CEOs who have been delivering solid results for their companies. This situation raises critical questions about corporate leadership stability and strategy in the ever-evolving business landscape.

According to a report from The Conference Board and other research entities, the S&P 500 has witnessed a considerable increase in CEO successions. The turnover rate among firms in the top three performance quartiles, determined by total shareholder return, surged from 7% in 2024 to 12% in 2025. In contrast, companies in the bottom quartile experienced only a modest rise, reaching 14% in the same period. This critical observation indicates that merely achieving high performance does not protect executives from the axe.

Ariane Marchis-Mouren, a Senior Researcher at The Conference Board and co-author of the report, suggests that these changes often result from strategic realignments rather than short-term performance issues. In many instances, leadership transitions were prompted by long-term succession planning, showcasing a proactive approach by boards to reshape leadership in light of changing market dynamics.

The report also highlights a fascinating trend: external appointments for CEO roles are on the rise. The share of external hires in the S&P 500 nearly doubled, jumping from 18% in 2024 to 33% in 2025—the highest observed in the last eight years. This significant shift signals a growing boardroom preference for fresh perspectives to tackle modern challenges rather than relying solely on in-house candidates.

Key findings from the report indicate that in 2025, 67% of S&P 500 CEO successions were internal appointments, while the Russell 3000 reflected a slightly higher internal promotion rate of 65%. Despite internal promotions dominating, the increasing share of external hires suggests a strategic pivot in board thinking. Umesh Chandra Tiwari, Executive Director of ESGAUGE, underscores that boards are seeking leaders who can respond to disruption, accelerate transformation, and align with evolving stakeholder expectations.

Another notable aspect of CEO transitions in 2025 is the longer average tenure of departing CEOs. In the S&P 500, the average tenure increased to nine years, up from seven in the previous year. The Russell 3000 also saw the average tenure rise to eight years. This longer tenure reflects a delayed wave of retirements as companies seek to manage transitions more effectively during this disruptive period.

Interestingly, after years of increase, progress towards gender diversity in CEO positions appears to have plateaued in 2025. The S&P 500 maintained the same number of women CEOs at 48 over the past two years. In the Russell 3000, women now represent 7.7% of CEOs, a slight increase from 7.6% in 2024.

In reflecting on these trends, industry leaders have shared insights on why CEO transitions are happening at a higher frequency. Boards are taking a more proactive stance, executing transitions that were previously delayed during times of market volatility. Chuck Gray, Co-Leader of the US CEO and Board Practice at Egon Zehnder, mentions that these leadership changes often align with an overarching governance strategy, viewed not just as a reaction to performance issues but as an essential step in future-proofing organizations.

As 2025 progresses, expectations are set for an increasing number of CEO successions, particularly among large-cap companies. With SP 500 CEO succession announcements already surpassing 2024's figures, it is clear that boards are prepared to act with greater confidence. The notable rate of succession in large companies serves as an indicator of an evolving mindset among corporate boards, one that values strategic foresight and adaptability.

Ultimately, the rising CEO turnover trend highlights a complex interplay of strategic direction, governance, and market demands. As companies navigate an increasingly intricate business environment, they will need to continually reassess their leadership approaches to stay competitive and relevant in the years to come.