Strategy&’s 15th annual study of CEOs, Governance, and Success highlights the value lost by poor CEO succession planning and what companies can gain by better planning.

1. The value of getting CEO
succession right
Study of CEOs,
Governance, and Success
May 2015

2. Strategy&
• This is the 15th year Strategy& has examined CEO successions
and success among the world’s largest 2,500 public companies
• This year’s study looks at trends in CEO successions across
regions, industries, insiders/outsiders, and gender (among other
analyses)…
• … and looks in depth at the value of getting CEO succession right
• Company performance is negatively affected in the year
leading to and following the turnover regardless of the type of
turnover, planned or forced—and the effects are more severe
when a turnover is forced
2014 study of CEOs, Governance, and Success

3. Strategy&
Every year, around 14% of the world’s 2,500 largest
companies have a CEO turnover
Over the past 15 years, companies have gotten a lot better at
succession planning: the share of planned turnovers reached a
record high in 2014
Source: Strategy& analysis
Note: All figures may not add to totals because of rounding
0%
2%
4%
6%
8%
10%
12%
14%
16%
2.9%
2006
4.2%
3.4%
14.3%
1.8%
7.7%
9.1%
20102008
11.6%
2.2%
1.8%
2009
14.4%
6.3%
13.8%
2007
6.7%
3.4%
2005
15.4%
9.2%
3.6%
2.6%
2004
14.7%
7.8%
4.5%
2.4%
2003
9.8%
5.3%
3.2%
1.3%
2002
10.8%
5.0%
4.4%
1.4%
2001
10.9%
6.0%
2.4%
2.4%
2000
12.9%
4.6%
7.2%
14.4%
5.1%
2.2%
Turnoverrate
2014
14.3%
11.2%
1.9%
1.2%
2013
14.2%
10.1%
2.6%
1.5%
2012
15.0%
10.8%
2.8%
1.4%
2011
14.2%
9.8%
2.2%
2.2%
6.4%
3.4%
3.2%
CEO turnover rate by succession reason
CEO turnover events as a percentage of top 2,500 public companies
Forced
Planned
M&A

4. Strategy&
However, any change at the top can be disruptive to a
company
$
$
$
Focus
Priorities
Confidence
Job Security
Factors
affected by
change $
Momentum $
Leading to lower performance

5. Strategy&
Performance is negatively affected by a CEO turnover
in the year leading to and following the turnover
-4.0
-3.5
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5TSR
Year after turnover
-3.5%
Year leading up to turnover
-2.3%
Two years before turnover
0.5%
Median total shareholder return1) for companies undergoing
turnovers, relative to index, in the turnover window
2011, 2012 and 2013 turnover companies
Source: Strategy& analysis
1) Total shareholder returns are regionally adjusted, meaning that performance is measured relative to a regional index (S&P 500, Brazil Bovespa, FTSE 100, CAC 40, etc.).
Note: Exhibit excludes turnover events resulting from M&A, interims, and events with incomplete turnover information.

6. Strategy&
And companies forced into CEO turnovers experience
a much more severe drop in median TSR
Source: Strategy& analysis
1) Total shareholder returns are regionally adjusted, meaning that performance is measured relative to a regional index (S&P 500, Brazil Bovespa, FTSE 100, CAC 40, etc.).
Note: Exhibit excludes turnover events resulting from M&A, interims, and events with incomplete turnover information.
Comparative median total shareholder return1) relative to index, in
the turnover window
2011, 2012 and 2013 turnover companies
-15
-10
-5
0
5
-0.6%
Year after turnover
TSR
Year leading up to turnover
-0.5%
-13.0%
Two years before turnover
1.6%
-3.4%
-3.5%
Forced
Planned
As a result, we estimate that companies forced into CEO turnovers
instead of planning them miss out on some $1.8bn each in
shareholder value

7. Strategy&
If companies can reduce the share of forced turnovers
to 10% through better planning...
…Large public companies could together generate $60 billion in
shareholder value annually (if all else stays the same)
CEO Succession
Plan
Source: Strategy& analysis
Note: This analysis is based on turnovers occurring in 2011, 2012, and 2013 for which full turnover and market capitalization information are available. The analysis period is from one
year before the turnover date to one year after it.

8. Strategy&
To learn more, including
how companies can
improve their CEO
succession planning,
please visit:
http://www.strategyand.p
wc.com/chief-executive-
study