Once upon a time, a CEO’s tenure was a long, steady climb, often lasting a decade or more. Today, that stability is disappearing. The revolving door of executive leadership is spinning faster than ever, with high-profile ousters making headlines across Wall Street and beyond. From tech giants to legacy corporations, the trend is clear: More CEOs are being forced out, and activist investors are playing a major role in this downfall.
A recent study by PwC’s Strategy& found that in 2023, CEO turnover at the world’s 2, 500 largest public companies hit its highest rate in two decades. In the US, the trend is particularly pronounced, with executive firings and resignations climbing as investors demand accountability, fresh leadership, and improved financial performance.
So, what’s behind this shake-up at the top? The answer lies in shifting power dynamics, economic uncertainty, and the ever-growing influence of activist investors.
The Rise of Activist Investors – A New Power Center
Activist investors are no longer just a thorn in the side of corporate boards- they are a force to be reckoned with. Hedge funds and institutional investors, emboldened by social media and shareholder activism, are increasingly aiming at CEOs they believe are underperforming. In many cases, they are succeeding.
Take the case of Disney’s Bob Chepak. In 2022, he was unceremoniously ousted after just two years, largely due to pressure from shareholders dissatisfied with the company’s stock performance and strategic direction. Activist investor Nelson Peltz publicly criticized Disney’s leadership and demanded changes, signaling a new era where investors wield significant influence over corporate decision-making.
This trend isn’t limited to entertainment. In 2023, activist investor Carl Icahn successfully pushed for the resignation of Illumina CEO Francis deSouza, citing poor acquisition decisions and declining stock prices. The message is clear: if you’re a CEO, you’re only as good as your last quarter’s earnings—and the patience of activist investors is wearing thin.
The CEO Paradox: Performance vs. Perception
Interestingly, not all ousted CEOs are failures. Many are victims of what could be called the “CEO paradox”: even when a company is profitable, investors may still push for a change at the top if they believe leadership isn’t maximizing shareholder value. In some cases, the pressure comes from concerns about ESG (Environmental, Social, and Governance) factors, while in others, it’s about strategic direction and growth potential.
For example, in 2022, Starbucks CEO Kevin Johnson stepped down amid shareholder concerns over the company’s labor policies and supply chain issues. Similarly, Twitter’s former CEO Parag Agrawal was ousted in a dramatic boardroom coup led by Elon Musk after the billionaire acquired the company. In both cases, leadership was questioned not necessarily because of financial ruin but because of a perception that new leadership could better align the company with investor priorities.
What This Means for Corporate Governance
The rise in CEO ousters raises serious questions about corporate governance. Are boards becoming too reactive? Is short-term investor pressure undermining long-term business strategy? And what does this mean for the future of executive leadership?
On one hand, increased accountability is a positive development. CEOs can no longer coast on past achievements or rely on cozy board relationships to maintain their positions. Investors are demanding transparency, results, and a clear strategic vision. This shift has led to more rigorous executive evaluations and greater board oversight.
On the other hand, the pressure to deliver immediate results can lead to short-sighted decision-making. When CEOs constantly look over their shoulders, they may prioritize quick wins over sustainable growth. This could explain why companies with frequent CEO turnover often struggle to maintain long-term success.
A 2023 Harvard Business Review study found that companies with high CEO turnover underperform compared to their peers in the long run, as constant leadership changes disrupt strategic continuity and corporate culture. This suggests that while holding CEOs accountable is important, overemphasising rapid turnover may do more harm than good.
The Power Shift in Corporate America
The growing trend of CEO ousters and activist investor influence marks a profound shift in corporate governance. No longer can CEOs assume job security based solely on tenure or past success. The demands of modern investors—whether related to financial returns, social responsibility, or strategic direction—are reshaping what it means to be a corporate leader.
While this trend brings greater accountability and a push for better leadership, it raises concerns about instability and short-termism. The challenge for corporate America will be finding the right balance: ensuring CEOs deliver results while allowing them the time and space to build sustainable, long-term value.
