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Churn Indicates More Demanding Corporate Boards

By Published on .

NEW YORK (AdAge.com) -- Last year saw more CEO changes at Fortune 1000 companies than in any year this decade, according to a tracking survey from PR firm Burson-Marsteller.
'Boards are getting more antsy,' said Leslie Gaines-Ross, chief knowledge and research officer at WPP Group’s Burson-Marsteller.

Record number
One hundred and twenty-nine new CEOs were announced in 2005, up from 98 in 2004 and from 57 in 2000. Among the prominent switches were Hewlett-Packard’s Mark Hurd for Carly Fiorina and Sony Corp.’s Howard Stringer for Nobuyuki Idei. In the ad industry, Interpublic Group of Cos. put Michael Roth in the top job, moving David Bell to a co-chairman role.

“Boards are getting more antsy,” said Leslie Gaines-Ross, chief knowledge and research officer at WPP Group’s Burson-Marsteller. “There’s a heightened impatience. Directors’ reputations are on the line and they’re being held financially liable.”

Transitional difficulties
The churn, of course, is a negative trend for companies because CEO transitions cause any number of operational, administrative and marketing difficulties. “It impacts customers, employee base and productivity,” Ms. Gaines-Ross said. “In the marketing arena, the churn is responsible for the short tenures of CMOs.”

The average stint of chief marketers has been growing shorter, as measured in a 2004 survey by executive recruiter Spencer Stuart. That study put the average tenure at 23 months, compared to 54 months for CEOs.

Nike's CEO
A marketing disagreement was at the crux of the most recent high-profile CEO change. As reported in this week’s Advertising Age, Nike co-founder-chairman Phil Knight last week tossed William Perez after only 13 months on the job because of a difference in how each viewed ads. Mr. Perez focused more on the products and retailer relationships, while Mr. Knight favored leveraging Nike’s legendary brand.

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