Board and CEO Advisory Partners

The Evolving Path to CEO

An Analysis of the Changing Profile of CEOs in North America and Europe

​As we examined the background and experiences of more than 1,000 CEOs, several key themes emerged. Below is a short summary of the main findings, and the following pages provide additional detail.


A Study of Choices

This is not another study touting the need for CEO succession planning the evidence there is well established. Nor is this a report about how markets punish poorly planned CEO transitions, though this also is a well-accepted reality.

Rather, this is a study of choices. We examined the choices made by more than 1,000 boards and CEOs in North America and Europe—what type of role  CEOs decided to take, the experiences they sought and the opportunities they seized along the path to the CEO spot. Some of the choices occurred years ago, long before anyone was assured the top job; others were made quite recently to adjust to changing circumstances. The selection of these individuals—and the grooming that undoubtedly transpired prior to their appointment—similarly reflects choices made by thousands of board directors at many of the best-performing companies in the world.

Observed in aggregate, these choices provide a unique window into how the market for top CEOs is changing to meet current business challenges. While we did not set out to inspect CEO succession processes, we could not help but conclude that sustained rigor has had a profound effect on the available CEO options afforded to boards. Perhaps the most obvious figure demonstrating succession impact is the continued dominance of internal candidates. As shown below, in the United States, 85% of current CEOs were promoted internally, an increase from 78% when compared with the class of their predecessor CEOs. The rate of internal appointments was near or above 75% in almost every other country examined, with the notable exceptions of the United Kingdom (67%) and France (64%).


Choices in (Disruptive) Context

While the vast majority of companies use their succession program to groom and select internal leaders, several recent environmental factors—a few of which seem to be natural labor market byproducts of widespread succession planning—present companies with perhaps more alternatives than ever before.

Our results show a notable difference in the type of CEOs chosen when comparing current CEOs with their predecessors. And there are clear factors driving boards to opt for varying profiles.

First, change is accelerating. The average life span of a Standard & Poor’s (S&P) 500 company has shrunk over the last 50 years from 60 years to 18.1 In just the last 10 years, 50% of the S&P 500 has been replaced.2

Second, creative destruction can be seen in an increasing rate of consolidation: Merger and Acquisition (M&A) spending rose by 50% in 2015, and Goldman Sachs expects spending to climb further in 2016 to reach nearly $300 billion by S&P 500 companies.3 Europe similarly has seen a continued increase in M&A deal spending, which grew by 136% in the third quarter of 2015 vs. the same period in 2014.4 Indeed, the average size of what is considered a large cap company is now many times larger than when most predecessor CEOs were chosen.

These environmental shifts have impacted the preference that boards show for specific CEO profiles.

1. “The Art of Corporate Endurance”, Harvard Business Review, 2014.
2. “Increasing Churn Rate in the S&P 500”, Seeking Alpha, 2014.
3. “Goldman: This is How S&P 500 Companies Will Use Their Cash in 2016”, Bloomberg, 2015.
4. “Flashwire Europe Quarterly”, Factset, 2015.

New Profiles for New Mandates

In response to new dynamics, boards are betting on different leadership attributes and experiences. Among internally appointed CEOs, company lifers are losing favor—down in the United States to 26% of chosen CEOs vs. 34% previously.

Lifers are down in most countries, with Germany seeing the biggest drop, from 42% of predecessor CEOs to only 12% for existing CEOs.

Likewise, external appointments are rising (often dramatically) in some of the largest markets. In North America, external appointments are up from 13% to 19% when comparing current CEOs chosen before and after 2012. In the United Kingdom, the jump is most dramatic: Of existing CEOs hired since 2012, 46% are externals, up from 19% hired prior to 2012.

The background of recent externally hired CEOs reveals that boards also are emphasizing the selection of hands-on leaders.

As shown in the chart below, particularly in the markets where external hires have been especially high of late, sitting CEOs and other P&L owners such as division or region heads are gaining favor, while appointments from a chief operating officer (COO) spot are increasingly rare.

The growing preference for P&L leaders generally holds, if in slightly less dramatic terms, for internal hires as well. In North America, pre-appointment COO roles have dropped from 55% of those hired before 2012 to just 45% of those hired more recently. This trend also holds in Europe, where preappointment roles for COOs are 14%, down from 17%.

That said, boards are also more and more seeking a CEO who has gained exposure to a functional leadership role. Fifty percent of CEOs appointed since 2012 have held a functional leadership position compared with only 42% appointed before 2012.

Boards increasingly inoculate the CEO from the added chair responsibilities. Only 59% of U.S. CEOs also are chairs, 39% of those appointed since 2012 hold both seats and only 13% of those appointed since 2012 were named chair at the time of appointment. Of course, combining the CEO and chair positions is much less common in Europe except in France, where 62% hold both titles—but has decreased to only 30% of those appointed since 2012. This is not just a move to please investors hoping for demonstrations of board independence. It also allows the new CEO time to focus on learning one job, not two, and gives the market time to gain familiarity with what may be a new face.

Safety Nets for Riskier Choices

The results show emerging signs that boards can lower the risk normally associated with choosing a non-traditional CEO candidate—and, in doing so, redefine what might be considered as the safe choice. Some of these actions could be interpreted as boards covering their bases, shoring up operational components of how talent is assessed, attracted and onboarded, including:

  • Improve mechanisms to help new outsiders quickly acclimate to company—Conventional wisdom used to hold that longer preappointment tenure led to longer CEO tenure. Insiders, it seemed, fared better due to company-specific cultural factors that hampered new executives. But advancements in human capital have helped companies to quickly create “familiar promotion” candidates by onboarding succession hires more effectively. As shown in the table below, in many countries CEO tenure for those with only one to three years of preappointment time in the company now is on par with those of longtime company veterans. While tenure as CEO is not a perfect proxy for CEO performance, one assumes greater tenure is somewhat correlated to board satisfaction with CEO performance. Boards able to help reduce assimilation friction allow a more effective peer vs. peer comparison as the succession decision nears.

  • Scout for succession “prep” opportunities—Some boards choose to focus more attention than others on proactively recruiting potential succession “prep” candidates in the one- to three-year time frame before promotion to CEO. Such hires are only 12% of current U.S. CEOs (though this is up from 10.7% for the predecessor class). However, many European boards utilize this practice, wherein Germany (19%), United Kingdom (19%), Switzerland (18%) and the Nordics (15%) lead the way. And in markets such as the United States where succession “prep” hires still are relatively rare, a clear shift is afoot: Thirty-five percent of these types of recent external selections were a division head of a large business, up from 17% for the predecessor group. This creates some pressure to quickly acclimate outsiders but greatly expands options for boards looking for the best possible successor.


  • Expand succession efforts beyond the company’s four walls—Some boards include for consideration external CEO candidates who may have deep knowledge of the company. In the United States, 37% of external CEOs hired since 2012 were “familiars” either because they sat on the board or previously served as a senior executive with the company. For example, Arnold Donald—a longtime Monsanto executive—was chosen as Carnival’s CEO after serving in a non-executive capacity on its board for 12 years. Though the sample size of external hires in Europe since 2012 is small, the practice of importing “familiars” carries over for other countries such as Germany (75% of externals since 2012) and the Nordics (100%). Expanding the antennae of succession planning to include familiar outsiders can maximize options while mitigating culture risk. Perhaps due to concerns around independence, this does not seem to have impacted the United Kingdom, where only 10% of recent external hires fit this description.

1. Familiar external hires include those chosen from the board or executives with pervious tenure with the hiring company.

Amidst Change, Some Things Remain the Same

Despite these shifts—given all the evidence of disruption and talk of innovation, one might have expected far more changes in the type of CEOs chosen. If anything, it appears boards are just finding new ways to land at a relatively safe and proven option. The profile of recently appointed CEOs has not changed as dramatically as the environments that surround them.

The vast majority remain longtime company insiders. Even when the predecessor lasted less than three years, robbing the company time to plan an orderly succession, boards in the United States still chose an internal successor 73% of the time. And a growing share of recently appointed CEOs already have held a CEO role.

A surprisingly small number of those within the biggest markets have international experience. Despite the recent increase, only 26% of current U.S. CEOs have experience abroad. In Europe, the share of CEOs with international experience is higher (69%) yet still lower than expected given the level of cross-border business.

Boards may be choosing an external candidate to tap into international perspective, as those placed since 2012 are considerably more likely to have global experience. However, the overall impact is muted given the continued dominance of internal selections.

CEOs remain remarkably non-diverse. Only 5% of U.S. and 1% of European CEOs are women. Only 3% of U.S. and 3% of European CEOs are ethnic minorities.

In the end, of course, where a CEO comes from and the path each took to the office are only part of the story. Naturally, other factors will influence the degree to which each CEO experiences success. However, the collective choices of hundreds of companies over an extended period provide a unique window into how preferences have changed in view of what is seen as most likely to drive success today.

The following pages provide a deeper look into regional and industry differences seen for both current and predecessor CEOs.

Country-Specific Profiles


















CHARLES TRIBBETT co-leads the firm’s U.S. CEO & Board Practice. He is based in Chicago.

JUSTUS O’BRIEN co-leads the firm’s U.S. CEO & Board Practice. He is based in New York.

HARM VAN ESCH leads the firm’s European CEO & Board Practice. He is based in Amsterdam.

TED MCKENNA is the firm’s Global Knowledge Leader for the CEO & Board Practice. He is based in Chicago.

TATIANA SCRIPNIC is an Analyst within the firm’s CEO & Board Knowledge team. She is based in Chicago.

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The Evolving Path to CEO