Update (As of November 11, 2019): In October, Under Armour chief executive officer and founder Kevin Plank announced he would leave the company. Also in October, Nike CEO Mark Parker announced he would step down from his executive role at the footwear company. In November, McDonald’s CEO Steve Easterbrook exited the company.
Within days of each other last week, the chief executive officers of eBay, Juul, and WeWork all stepped down from leading their respective companies.
It’s more than a coincidence.
Their departures are actually part of a trend—a record 159 CEOs reportedly left their executive posts in August, nearly 30% higher than in July. Through August, more than 1,000 CEOs stepped down, a level not seen since the financial crisis of 2008, according to reports.
What’s going on?
Even though chief executives may launch their companies and lead them, they can be forced out for a number of reasons, including:
- A company’s board of directors may be unhappy with their performance, and force them out. The recent departures of CEOS, it turns out, may be because investors want to see higher sales and higher stock prices, and boards are willing to push out executives who aren’t living up to their performance hype, according to reports. This is particularly the case in light of many high-profile public offerings that have fizzled, failing to meet the price thresholds for stock that had been promised.
- In recent years, there are have been sexual harassment scandals, and other issues related to personal behavior, that have forced a record number of executives to leave.
- It also turns out that 178 of the CEOs who stepped down this year left because they retired, according to reports.
eBay, Juul, and WeWork
WeWork, the office space leasing company, forced its chief executive and founder Adam Neumann to resign, and then shut down its scheduled IPO. Personal behavior was just one issue forcing Neumann to step down, according to reports. Neumann had overhyped the company, it turns out. Its pre-IPO valuation of $47 billion was found to be four times higher than its actual value, according to reports. As a result, the new co-CEOs of the company have withdrawn the IPO until sometime next year.
eBay CEO Devin Wenig was reportedly forced out by investors who want the company to rethink its business strategy, sell off some units, and achieve faster growth and a higher stock price.
Juul CEO Kevin Burns was forced out over the mounting number of vaping deaths and illnesses that have caused numerous companies and states to stop selling e-cigarettes and other vaping products
What’s a CEO?
Companies have many executives in charge of different tasks at a company. They are sometimes referred to as the C-suite since their titles start with the word “chief.” Here are some of the top executive roles and their functions:
The chief executive officer (CEO), is the top executive role. He or she is responsible for leading the company and its growth. Some companies may also have a president, who shares some of the strategic activities of the CEO, but who also reports to the CEO. Sometimes a CEO can have both titles, president and chief executive officer.
Chief financial officer (CFO) is in charge of the company’s financial activity.
Chief operations officer (COO) is in charge of the company’s day to day operations.
Chief marketing officer (CMO) is in charge of the company’s strategic marketing plan.
Who reports to whom?
While all of the other officers generally report to the CEO, all of the executives, including the CEO, report to the board of directors.
In a public company, the board is chosen by shareholders. The board has the ultimate authority over a company’s direction, and its executives.
When a CEO leaves, or the board asks a CEO to leave, a replacement person is usually named immediately. It’s part of what’s known as a succession plan, which is a blueprint that ensures the continuity of a business and its operations.