Why do CEOs stand down?
The recent decision by Falck’s board of directors to ask CEO Allan Søgaard Larsen to stand down after 27 years in the company highlights the complexities of power relations between executives and directors.
But how do you know whether a departure is related to poor financial performance, wider corporate governance issues, or something else entirely?
Companies must meet expectations, and failure to do so will most likely lead to an executive getting the axe. Sometimes, it is also a question of corporate strategy being perceived as not delivering enough. Both Korian’s CEO Yann Coleou and Bupa’s CEO Stuart Fletcher, for instance, left their respective companies because shareholders did not believe their acquisition-focused strategy paid off – despite previous successes.
But poor financial results are sometimes not enough to explain changes at the senior management level. Stephan Leonhard’s departure from Asklepios after 14 years in the group raised questions about what plans owner and CEO Bernard gr. Broermann had in store for the group.
And what of Larsen? Falck does say that its decision is related to, in the words of Chairman Peter Schütze, “an adversary mix of the roles of executive management and co-ownership”. There has been speculation, however, as you can read in this week’s edition, that it might be linked to poor 2015 results.
We would welcome your thoughts on this story. Email your views to Ariane Jugieux or call 0207 183 3779.