Looney and Croft take total FTSE 100 CEO changes to 18 in 2023

• Change in boss at BP and St James’s Place means 18 FTSE 100 firms will get a new leader in 2023 (and four more are due to get one in 2024)
• This is the second-highest figure since 2000 (and lags only 2020’s total of 22)
• In addition, 31 FTSE 100 firms are set to see a change in chief financial officer (with six further changes planned for 2024)
• This is the highest number since 2000 (and is only really challenged by 2020’s tally of 29)
• Retirement and higher standards of governance are two reasons why, and poor share price performance a third, though investors may also wonder whether executives are getting out while the going is still good

“The departure of Bernard Looney from BP and Andrew Croft from St James’s Place, albeit for differing reasons and in very different manners, take the total number of changes in FTSE 100 bosses scheduled for 2023 to 18, the second-highest number since 2000,” says AJ Bell investment director Russ Mould. “Add 31 changes in chief financial officer, plus four more CEOs and six more CFOs who are ready to step down in 2024, and British boardrooms are seeing the second-greatest level of turnover this century. Investors must assess each case individually to judge they are the result of good succession planning, greater demands for better governance and standards of personal behaviour, pressure from investors after poor share price performance or simply an attempt to polish a legacy and get out while the going is still good.

“St James’s Place’s Mr Croft has been CEO since January 2018 and his current 5.7 year-stint is enough to rank him the 39^th longest-serving boss within the FTSE 100. Mr Looney held his post for just 3.6 years (53^rd overall at the time of his departure), well below the overall average of 5.4 years.

Source: Company accounts. *2023 and 2024 changes as already enacted or announced

“These two changes mean 15 FTSE firms have already seen a change in boss in 2023, including Mr Looney’s sudden exit, while three more are planned before the year is out, including Mr Croft. A further four new CEOs are due to take the helm in 2024, according to plans laid out this year.

Source: Company accounts. Changes as already enacted or announced

“A total of 18 changes in boss is the second-highest figure since 2000. Only 2020’s tally of 22 exceeds it (and we still have more than three months to go in 2023).

“Some are the result of governance issues, such as at NatWest, RS Group, British American Tobacco and now BP. Others look like carefully controlled succession planning after lengthy and successful tenures, notably at Halma, Whitbread and United Utilities, while shareholder discontent may have influenced thinking at Unilever and Vodafone. BP’s poor share price performance during Mr Looney’s tenure may also help to explain the muted response to his departure, especially as he oversaw a dividend cut and laid down a strategy which seemed to please neither environmental campaigners nor hard-nosed profit-chasing investors, to perhaps outline the challenge that faces his eventual full-time successor.

Source: Refinitiv data. Bernard Looney took over as BP CEO on 5 February 2020

“The turnover among the ranks of CFOs is even greater, with the result that the average number-cruncher’s tenure is shorter than that of the average CEO, at 4.2 years.

Source: Company accounts. *2023 and 2024 changes as already enacted or announced

“31 changes in CFO have already been announced and scheduled for 2023, with another six prepared for 2024. This year already exceeds the previous post-2020 peak of 29 changes.

Source: Company accounts

“May’s sudden dismissal of Prudential’s chief financial officer James Turner for a breach of conduct rules was an unusual reason for someone to leave such a position. Again, shareholder pressure on the board after poor operational or share price performance, retirement, getting (or missing out on) the job of chief executive, the promotion of a predecessor to the top job, the appointment of an interim CFO after a sudden change or the desire for a fresh challenge have all been much more common.

“The combined total of 49 FTSE 100 CEO and CFO changes already announced and planned for 2023 is eye-catching (and 10 more are due in 2024), since only 2020’s total of 51 can beat that. The year of 2020 is not one that lives fondly in the memory, thanks to Covid, lockdowns and – from the much narrower perspective of investment – a 43% drop in aggregate FTSE 100 pre-tax profit and a 17% drop in total dividend payments.

Source: Company accounts. *2023 and 2024 changes as already enacted or announced

“Investors could therefore be forgiven for wondering whether British boardrooms think there is something nasty coming around the corner – perhaps that the long-awaited recession is upon us – and that some executives have looked to get out with their strategies, reputations and stock option packages intact while they still could.”