2015 CEO Success study - PwC · Source: Strategy& 2015 CEO Success study 11 28% 21% 17% 72% 79% 83% 0-4 years 4-8 years 8+ years Incoming insider CEO Incoming outsider CEO An outsider

Global findings

2015 CEO Success study

April 2016 Briefing Document

April 2016Strategy& | PwC

About the 2015 CEO Success study

Strategy&, PwC’s strategy consulting business, annual study of worldwide CEO

succession patterns examines the degree, nature, and geographic distribution of

chief executive changes among the world's 2,500 largest public companies.

The Rise of the Outsider CEO

Hiring an executive from outside a company to serve as chief executive officer

used to be seen as a last resort — something that typically happened when a

board of directors had to force out the incumbent CEO suddenly, or had failed to

groom a suitable successor, or both. Over the last several years, however, more

companies have deliberately chosen an outsider CEO, more often than not as

part of a planned succession. In this year’s report, we look at the data on

outsider CEOs and the circumstances in which outsiders are being hired. In

addition we have our annual analysis on CEO turnover, the 2015 incoming class

of CEOs, and women CEOs

1


Outsider CEO summary

Companies are now making a deliberate choice in their succession planning to bring in outsider CEOs. In the latest four-year period (2012–15 boards chose outsiders in 22 percent of planned turnovers, up from 14 percent in 2004–2007. That represents a 50 percent increase in the rate of outsider selection.

Industries experiencing the most disruption have brought in higher-than-average shares of outsider CEOs. These industries include telecommunications (38% incoming outsider CEOs from 2012 to 2015), utilities (32%), healthcare (29%), and energy (28%).

Outsider CEOs were more likely to be hired if the:

• Company was low performing

• Chairman did not have CEO experience in the same company

• Former CEO was also an outsider

Outsider CEOs were less likely to be hired if the:

• Chairman was hiring their first CEO at the company

• Former CEO had a long tenure

• Company was large

Outsider CEOs have closed the performance gap with insiders. For the third straight year, outsider CEOs have delivered higher median total shareholder returns than insiders.

Western European companies in general are hiring outsiders more reactively than proactively. Western European companies hire almost double the share of outsider CEOs compared with companies in the U.S./Canada. Additionally, outsider CEOs in Western Europe are significantly more likely to be appointed to low-performing companies and more likely to be forced out.

2


More outsider CEOs now come in via planned successions, showing that hiring an outsider is more of a deliberate choice than a necessity

Incoming outsider CEOs by turnover type

2004–2015

Note: Exhibit excludes turnover events resulting from M&A, interims, and events with incomplete information.

Source: Strategy& 2015 CEO Success study

3

43%

58%

74%

57%

42%

26%

2008–20112004–2007 2012–2015

Forced turnover

Planned turnover


Outsiders now account for more than a fifth of all CEOs hired via planned turnovers

Incoming CEOs via forced turnover

by insider/outsider pedigree

2004–2015



4

Incoming CEOs via planned turnover

by insider/outsider pedigree

2004–2015

32% 33% 35%

68% 67% 65%

2004–2007 2008–2011 2012–2015

14% 17% 22%

86% 83% 78%

2012–20152008–20112004–2007

Incoming insider CEO

Incoming outsider CEO


Western European companies hire outsider CEOs almost twice as frequently as companies in the U.S./Canada

Percentage of incoming outsider CEOs by region

2004–2015

1) "Other Mature" economies include Argentina, Australia, Bahrain, Chile, Czech Republic, Hong Kong, Hungary, New Zealand, Poland, Korea.

2) “Other Emerging" economies include Egypt, Kazakhstan, Mexico, Nigeria, South Africa, Turkey, Vietnam.

Note 1: "Mature" countries are defined as per the U.N. Development Programme 2015 ranking of countries with "very high human development" (human development index >0.80);

all others are "emerging“ countries.

Note 2: Exhibit excludes turnover events resulting from M&A, interims, and events with incomplete information.


5

21%

35%

30%

21%

2%

20%

26%25%

21%

17%

30%30%

36%

24%

3%

China

14%14%

U.S./Canada

18%

Other Emerging2)Western Europe

32%

27%

Other Mature1)

23%

Brazil,

Russia, India

38%

9%

Global Japan

4%

2012–20152008–20112004–2007


Industries experiencing the most disruption have brought in higher-than-average shares of outsider CEOs

Percentage of incoming outsider CEOs by industry

2004–2015

6

1) "Consumer Discretionary" includes automobiles and components, consumer durables and apparel, consumer services, media, and retailing.



20%21%

24%

15%17%

21%20%

25%

29%

21% 21%

25%

15%

26%24%

22%

15%

19%21%

26%26%

32%

24%

28%

21% 23%

Cross

Industry

Utilities

19%

Telecommunication

Services

Healthcare Energy

38%

29%

18%

IndustrialsConsumer

Staples

15%

Materials

19%

Consumer

Discretionary

Information

Technology

23%

Financial

Services

2012–20152004–2007 2008–2011


Low-performing companies were more likely to hire outsider CEOs than high-performing companies, except in forced turnovers

Percentage of incoming outsider CEOs by company performance and turnover type

2004–2015

1) Low-performing companies are defined as companies whose annualized regionally adjusted total shareholder returns were in the bottom quartile over their outgoing CEO's

tenure. High-performing companies are defined as companies whose annualized regionally adjusted total shareholder returns were in the top quartile over their outgoing CEO's

tenure.



26%

30%

18%

22%

38%

Planned turnoversForced turnovers

36%

Forced and planned turnovers

High-performing companiesLow-performing companies1)

High-performing companies were more likely

to hire outsider CEOs in forced turnovers

because those forced turnovers were most

often due to board/shareholder struggles or

ethical lapses.

7


Low-performing Western European companies were much more likely to hire an outsider CEO in forced turnover situations than companies in the U.S./Canada

Percentage of incoming outsider CEOs by company performance and turnover type

2004–2015

1) Low-performing companies are defined as companies whose annualized regionally adjusted total shareholder returns were in the bottom quartile over their outgoing CEO's

tenure. High-performing companies are defined as companies whose annualized regionally adjusted total shareholder returns were in the top quartile over their outgoing

CEO's tenure.

2) “BRIC/Other Emerging" economies include Brazil, Russia, India, China, Egypt, Kazakhstan, Mexico, Nigeria, South Africa, Turkey, Vietnam.



Note 2: Exhibit excludes turnover events resulting from M&A, interims, and events with incomplete information.


8

31%30%

20%

Western

Europe

32%

42%

Global

22%

32%

18%

BRIC/Other

Emerging2)

U.S./Canada

Low-performing companies1) High-performing companies

29%

25%26%26%

18%

Global

27%

Western

Europe

U.S./Canada

13%

33%

BRIC/Other

Emerging

40%

34%

51%

36%

55%

BRIC/Other

Emerging

26%

Western

Europe

Global

38%

U.S./Canada

47%

Forced and planned turnovers Planned turnovers Forced turnovers


Outsider CEOs were more likely to be hired if the chairman did not have CEO experience in the same company or if the former CEO was also an outsider

Incoming CEO pedigree by outgoing

CEO pedigree

2004–2015



9

Incoming CEO pedigree by chairman

pedigree

2009–2015

36%18%

64%82%

Outgoing outsider CEOOutgoing insider CEO

28%

84%72%

16%

Chairman did not have

previous CEO experience

in the same company

Chairman had previous

CEO experience in the

same company



If the chairman did not have

CEO experience in the same

company, an outsider was

hired 28% of the time.

If the outgoing CEO was also

an outsider, 36% of the time

they were replaced with

another outsider CEO.


Chairmen who are hiring their first CEO at the company are less likely to appoint an outsider CEO unless the former CEO was also an outsider

Percentage of incoming outsider CEOs by whether it was the chairman’s first CEO

appointment at the company and former CEO pedigree

2009–2015



10

15%

20%

26%27%26%

Outgoing outsider CEO

38%

Outgoing insider CEOOutgoing insider or outsider CEO

Chairman’s first CEO appointment at the company Not chairman’s first CEO appointment at the company

New chairmen are more likely to stick with

the pedigree of the former CEO while

experienced chairmen seem to ignore the

pedigree of the former CEO. They choose

perhaps more rationally as they know the

company and its leaders better.


The longer the tenure of the former CEO, the less likely an outsider CEO was to be hired

Incoming CEO pedigree by tenure of former CEO

2004–2015



11

28%21% 17%

72%83%79%

0-4 years 4-8 years 8+ years



An outsider CEO was hired 28%

of the time if the former CEO

had a tenure of 0-4 years.


The larger the company, the less likely it was to hire an outsider CEO

Incoming CEO pedigree by market

cap quartile

2004–2015

12

Incoming CEO pedigree by # of

employees quartile

2009–2015

1) Market cap quartile was based on company ranking in world’s 2,500 largest. Companies ranked 1,876–2,500 were in the smallest quartile. Companies ranked 1–625 were in the

largest quartile. Largest market cap quartile companies had a market cap value in 2015 of more than US$19.7 billion.

2) Smallest employee quartile companies had 12–6,109 employees. Companies in the largest employee quartile had 41,278–2,200,000 employees.



28% 28% 25%16%

72% 72% 75%84%

Second

market cap

quartile

Largest

market cap

quartile

Third market

cap quartile

Smallest

market cap

quartile1)

30% 25% 21% 17%

70% 75% 79% 83%

Third

employee

quartile

Second

employee

quartile

Smallest

employee

quartile2)

Largest

employee

quartile




More recently, companies have been hiring outsider CEOs with more industry and CEO experience

Incoming outsider CEO from same or

different prior industry1) compared with

current company industry, 2004–2015

13

Incoming outsider CEO with prior public

CEO experience

2009–2015

1) Exhibit shows incoming CEOs who joined their company as CEO, broken down by whether they had worked in the same or a different industry immediately before joining the

current company.



57%63%

70%65%

43%37%

30% 35%

2012 2013 2014 2015

26% 29%23%

37%29%

35%41%

74% 71%77%

63%71%

65%59%

2014 2015201320122009 20112010

Same industry

Different industry

Has public CEO experience

No public CEO experience


In 2015, in the largest companies, 60% of incoming outsider CEOs had previous public CEO experience

14

1) Market cap quartile was based on company ranking in world’s 2,500 largest. Companies ranked 1,876–2,500 were in the smallest quartile. Companies ranked 1–625 were in the

largest quartile. Largest market cap quartile companies had a market cap value in 2015 of more than US$19.7 billion.



30% 30%

50%60%

70% 70%

50%40%

Largest market cap quartileThird market cap quartileSmallest market cap quartile Second market cap quartile

Has public CEO experience

No public CEO experience

Incoming outsider CEO prior public CEO experience by market cap quartile

2015


Outsider CEOs were more likely than insiders both to have international experience and be of different nationality than their company HQ region

Incoming CEO experience1) in different

regions compared to company HQ region

2012–2015

15

Incoming CEO nationality compared with

company HQ region

2009–2015

1) “Experience in different regions” means incoming CEOs’ experience in regions other than company HQ region.



32%46%

68%54%

Incoming outsider CEOIncoming insider CEO

86%73%

17%

10%

10%

Incoming outsider CEOIncoming insider CEO

5%

Has not worked in other regions

Has worked in other regions

Different country, different region

Different country, same region

Same


The financials industry hired almost all its outsider CEOs from its own industry

Incoming outsider CEO from same or different prior industry1) compared to current

company industry

2004–2015

1) Exhibit shows incoming CEOs who joined their company as CEO, broken down by whether they had worked in the same or different industry immediately before joining the

current company.




63%

92%

77% 75%70%

64%58% 56%

44% 41%

28%

37%

8%

23% 25% 30%36%

42% 44%

56% 59%

72%

Cross Industry UtilitiesConsumer

Discretionary2)

IndustrialsMaterialsInformation

Technology

Consumer

Staples

EnergyHealthcareTelecommunication

Services

Financial

Services

Same prior industry

Different prior industry

16


Historically, outsider CEOs were much more likely to be forced out than insiders, but the difference has narrowed

Outgoing outsider CEOs by turnover type

2004–2015

17

Outgoing insider CEOs by turnover type

2004–2015

49% 52%64%

39% 32%21%

12% 16% 14%

2008–20112004–2007 2012–2015

59%66%

73%

31% 21%16%

10% 13% 11%

2008–2011 2012–20152004–2007

Note: Exhibit excludes turnover events with incomplete information.


Planned turnover

Forced turnover

Merger and acquisition


Outgoing outsider CEOs have had longer median tenures than insider CEOs over the last two years

18



2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

0.0

4.0

5.0

4.5

5.5

6.0

Years6.0

5.0

5.8

5.3

5.05.0

4.0

4.8

5.6

4.7

3.5

5.05.2

4.8

3.7

4.6

5.2

5.9

5.1

5.2

4.8

5.8

4.0

4.8


Outgoing insider CEO

Outgoing CEO median tenure by pedigree

2004–2015


For the third straight year, outsider CEOs have delivered higher median total shareholder returns than insiders

19

1) Total shareholder returns are annualized over outgoing CEOs' tenure and are regionally adjusted, meaning that performance is measured relative to a regional index (S&P 500,

Brazil Bovespa, FTSE 100, CAC 40, etc.).



Median total shareholder returns1) by outgoing CEO pedigree

2000–2015

3.9%

2.9%

4.6%3.9%

4.1%

-1.2%

0.7%

3.9%

11.0%

-3%

2%

3%

0%

1%

-1%

6%

-4%

-2%

-5%

5%

7%

9%

8%

4%

11%

10%

-4.6%

2000 2003 2007

1.5%

2005

-0.6%

2006 2008

4.0%

0.1%

2009

5.6%

0.9%

2001

-0.3%

2012

4.6%

0.1%

2014

4.6%

3.2%

0.6%

2015

3.7%

4.6%

-3.0%

2.2%

2013

2.6%

2010

2.4%

2004

0.5%

Regionally adjusted

annualized TSR

3.1%4.1%

2002

0.3%

2011


Outgoing insider CEO

One reason we believe outsiders are performing better is that the

outgoing CEOs over the last three years include a higher number

who were hired in planned rather than forced turnovers, and fewer

of them were themselves forced out. Historically, most outsiders

had been hired following forced successions, more often than not

in situations where the company had not been performing well.


Most recently, outsider CEOs in Western Europe have been significantly more likely to be forced out than outsiders in any other region

20



*Sample size in Japan and China not significant for all 12 years. Sample size in Brazil, Russia, India not significant from 2004–2007.



Note 2: Exhibit excludes turnover events with incomplete information.


Percentage of outgoing outsider CEOs via forced turnovers by region

2004–2015

25%

54%

41%39%

22%

0%

20%

41%40%

32%

5%

14%

19%20%

43%

21%

37%

Other Emerging1)

38%

47%

Global Western Europe Other Mature2)

67%

China*

7%

Brazil,

Russia, India*

36%

Japan*

17%18%

U.S./Canada

2012–20152004–2007 2008–2011


Outsider CEOs in Western Europe consistently perform worse than those in the U.S./Canada

21

1) Total shareholder returns are annualized over outgoing CEOs' tenure and are regionally adjusted, meaning that performance is measured relative to a regional index (S&P 500,

Brazil Bovespa, FTSE 100, CAC 40, etc.).



Outgoing outsider CEO by quartile of annualized shareholder returns1)

2004–2015

14%

29%20%

26%

14%21%

27%28% 30%

34% 29% 30%

50%

2012–20152008–20112004–2007

Lowest TSR Quartile

Second TSR Quartile

Third TSR Quartile

Highest TSR Quartile

18%27% 33%

24%

33% 24%

32%

23%16%

26%17%

28%

50%

2012–20152008–20112004–2007

U.S./Canada Western Europe

In the last four years, 60% of outgoing

outsider CEOs in the U.S./Canada have been

in the two highest TSR quartiles compared to

only 44% of outgoing outsider CEOs in

Western Europe. Outsider CEOs in Western

Europe are more likely to be appointed to low-

performing companies and more likely to be

forced out than outsiders in the U.S./Canada.


CEO turnover summary

In 2015, the total CEO turnover rate at the world’s 2,500 largest companies was 16.6%, a study record high. 17% of all CEO turnovers in 2015 were due to M&A, the highest since 2007.

Brazil, Russia, and India (BRI) lead the world again in CEO turnovers while Japan and Western Europe reached five year highs.

– In four out of the last five years, BRI has had the highest CEO turnover rate.

– Japan went from the lowest CEO turnover rate in 2014 (12%) to the second highest in 2015 (19%) Western Europe went from 14% in 2014 to 18% in 2015.

Telecommunication services has the highest CEO turnover rate for the fifth straight year; five other industries led by energy and materials reached five year highs.

– With the falling price of oil and other commodities, CEO turnover jumped in the following industries:

• Energy: 18% in 2014 to 23% in 2015

• Materials: 17% to 20%

• Utilities: 13% to 17%

• Financial services: 13% to 16%

22


In 2015, the total CEO turnover rate of the world’s 2,500 largest public companies was 16.6%, a study record high

23



CEO turnover rate by succession reason

CEO turnover events as a percentage of top 2,500 public companies

7.7%

9.1%

7.2%

9.2% 9.8%

6.3%

10.9%

11.2%10.1%

10.8%

6.7%7.8%

5.3%5.0%6.0%6.4%

3.4%3.6%

4.5%

3.2%

1.9%

4.2%

3.0%

2.6%

2.8%

2.2%

2.2%

5.1%

4.6%

4.4%2.4%

3.4%

1.8%

3.4%

1.4%

1.8%

2.4%

2.9%

1.2%1.5%2.2%2.2%

2.6%

1.4%

3.2%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

16%

17%

2003

11.6%

(290)

2008

14.3%

(359)

14.4%

(361)

16.6%

(416)

2015

1.3%

9.8%

(244)

2000

10.9%

(272)

2012 20132004

14.3%

(357)

2014

2.8%14.2%

(355)

2001

10.8%

(270)

2002

12.9%

(323)

2007

13.8%

(345)

14.4%

(359)

15.4%

(386)

2.4%

14.7%

(367)

2005 2009

14.2%

(354)

15.0%

(375)

201120102006

Turnover rate

Planned turnover

M&A

Forced turnover


In 2015, 17% of all CEO turnovers were due to M&A, the highest since 2007

24



CEO succession reasons as a percentage of turnover events

2000–2015

49%56%

46%54% 53%

60%

44% 48% 50%

64% 66% 69% 72% 71%78%

65%

26%22% 41%

32% 31%23%

32%30%

35%

24% 19% 15%18% 19%

13%

18%

25% 22%13% 14% 17% 17%

24% 21%15% 13% 15% 16%

10% 10% 9%17%

2011 2015200520042003 2009 2012200220012000 20142006 2008 20102007 2013

Forced turnover

M&A

Planned turnover


Brazil, Russia, and India had the highest rate of CEO turnovers followed by Japan and Western Europe

25







CEO turnover rate by region and succession reason

2015 CEO turnover events as a percentage of top 2,500 public companies in each region

10.9%

17.3% 18.4%

10.3% 11.7% 13.1%10.7%

7.7%

3.0%

3.1%

5.2% 3.2% 3.1%

3.1%

2.4%

4.4%2.5%2.8% 1.0%

23.6%

(30)

1.0%

Brazil,

Russia, India

Global

16.6%

(416)

2.3%

16.7%

(33)

19.4%

(40)

Other Mature1)

2.2%

Western Europe

16.9%

(58)16.1%

(42)

17.9%

(90)

ChinaJapan

2.0%

Other Emerging2)

14.3%

(123)

U.S./Canada

Planned turnover

M&A

Forced turnover

Region Brazil,

Russia,

India

China Japan Other

emerging

Other

mature

U.S./

Canada

Western

Europe

Total

Number of companies in region 127 261 206 198 343 861 504 2500


Japan went from the lowest CEO turnover rate in 2014 to the second highest in 2015

26







CEO turnover rate by region

2010–2015 CEO turnover events as a percentage of top 2,500 public companies in each region

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

2010 2011 2012 2013 2014 2015

Turnover rate

Other Mature1)

Japan

China

Brazil, Russia, India

Other Emerging2)

U.S./Canada

Western Europe


The telecommunication services industry had the highest CEO turnover rate followed by energy and materials

27




CEO turnover rate by industry and succession reason

2015 CEO turnover events as a percentage of top 2,500 public companies in each industry

Industry Consumer

discretionary

Consumer

staples

Energy Financial

services

Health

care

Industrials Information

technology

Materials Telecommunication

services

Utilities Total

Number of companies in

industry348 208 181 537 171 380 219 224 93 139 2500

10.9%

16.1%13.8% 13.8%

11.6%13.7%

9.6% 10.6% 10.1%

5.8%7.3%

3.0%

6.5%

6.6%

2.7%

2.9%2.2%

3.4%3.4%

2.6%

2.8%

2.2%

2.8%

3.1%

2.4%3.4% 2.2%

3.2%

5.8% 2.3%

0.7%

16.6%

(416)

19.6%

(44)

MaterialsEnergy

23.2%

(42)

24.7%

(23)

Telecommunication

Services

15.8%

(55)

0.6%

12.3%

(21)

16.2%

(87)

Financial

Services

0.9%

Consumer

Staples

Consumer

Discretionary

Healthcare

10.5%

(23)

Information

Technology

Utilities

16.3%

(34)

16.8%

(64)16.5%

(23)

Industrials

Planned

M&A

Forced

Cross

Industry


Six industries led by telecommunication services, energy, and materials all reached five year high CEO turnover rates

28




CEO turnover rate by industry

2010–2015 CEO turnover events as a percentage of top 2,500 public companies in each industry

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2010 2011 2012 2013 2014 2015

Turnover rate

Consumer Discretionary1)

Information Technology

Consumer Staples

Financial Services

Industrials

Materials

Telecommunications Services

Utilities

Energy

Healthcare


2015 incoming class of CEOs summary

In the 2015 incoming class of CEOs, new CEOs in Western Europe compared to the U.S./Canada were more likely to:

– Be outsiders (38% vs. 14%)

– Be of foreign nationality (30% vs. 15%)

– Have worked internationally (41% vs. 30%)

They were less likely to:

– Spend their entire career at one company (9% to 16%)

– Have an MBA (26% to 41%)

The global CEO is a myth. International work experience is decreasing, down to 28% in 2015.

Loyalty high in Japan and China. Three quarters of incoming CEOs in Japan and nearly one half in China spent their entire career at one company.

Tech CEOs skip business school. Only 13% of incoming CEOs in the information technology industry had an MBA compared to 44% in the consumer staples industry.

Good governance on the rise. Only 7% of incoming CEOs also held the position of chairman, a study record low.

29


In 2015, Western Europe hired more than double the share of outsider CEOs than the U.S./Canada

30





Note 2: Exhibit excludes turnover events resulting from M&A, interims, and events with incomplete information


Incoming CEO pedigree by region

2015

23%

38% 35% 33%25%

16% 14%

77%

62% 65% 67%75%

84% 86%97%

JapanBrazil,

Russia, India

ChinaOther Emerging2)Western Europe Other Mature1)

3%

U.S./CanadaGlobal




Half of the incoming CEOs in the telecommunication services industry were outsiders

31


Note: Exhibit excludes turnover events resulting from M&A and interims and events with incomplete information.


Incoming CEO pedigree by industry

2015

23%

50%

32% 31% 27% 27% 23% 18% 15% 14%

77%

50%

68% 69% 73% 73% 77% 82% 85% 86%94%

6%

Consumer

Staples

Materials Consumer

Discretionary1)

Cross

Industry

Financial

Services

IndustrialsHealthcare Information

Technology

EnergyUtilities



Telecommuni-

cation

Services


The median age for an incoming CEO was 53 with CEOs in Japan being the oldest (median age of 60)

32





Note 2: Exhibit excludes turnover events resulting from M&A and interims and events with incomplete information.


Incoming CEO median age by region

2015

Global median

age in 2014

was 52.

5051515253

55

60

53

U.S./CanadaWestern Europe China Other Emerging2)Brazil,

Russia, India

Global Other Mature1)Japan


Companies in Western Europe were most likely to hire a foreign CEO

33







Incoming CEO nationality compared with company headquarters region

2015

83%

97% 94% 90%84% 82% 78%

70%

12% 6% 10% 14% 14%20%

11%

19%5%

2%

ChinaJapan

5%

Global

3%

Other Mature2) Western Europe

1%

U.S./Canada Other Emerging1)Brazil,

Russia, India

Different country, same region

Same

Different country, different region


The global CEO is a myth. International work experience is decreasing, down to 28% in 2015

34

1)“Experience in different regions” means incoming CEOs’ experience in regions other than company HQ region.



Incoming CEOs with experience1) in different regions compared to company HQ region

2015

45%35% 34% 28%

55%65% 66% 72%

20132012 20152014




Incoming CEOs in Western European were most likely to have international work experience

35

1) “Experience in different regions” means incoming CEOs’ experience in regions other than company HQ region.

2) "Other Mature" economies include Argentina, Australia, Bahrain, Chile, Czech Republic, Hong Kong, Hungary, New Zealand, Poland, Korea..






Incoming CEOs with experience1) in different regions compared to company HQ region

2015

28%41% 38%

30% 26%18% 14%

72%59% 62%

70% 74%82% 86%

97%

Brazil,

Russia, India

JapanGlobal China

3%

Western Europe Other Mature2) U.S./Canada Other Emerging3)




More than a quarter of incoming CEOs spent their entire career at one company…

36

1) "Previous experience in different companies" means new CEO had worked at another company at any time before being named CEO at current company.



Incoming CEOs with previous experience1) in different companies

2015

20% 22% 20%26%

80% 78% 80%74%

20132012 20152014

Has not previously worked in other companies

Has previously worked in other companies


…a result of the high CEO turnover in Japan where three quarters of incoming CEOs spent their entire career at one company

37

1) "Previous experience in different companies" means new CEO had worked at another company at any time before being named CEO at current company.

Note: Exhibit excludes turnover events resulting from M&A and interims







Incoming CEOs with previous experience1) in different companies by region

2015

26%

76%

46%

29%21% 16% 13%

74%

24%

54%

71%79%

84% 87% 91%

9%

Global ChinaJapan Western EuropeOther Emerging3)Other Mature 2) U.S./CanadaBrazil,

Russia, India

Has previously worked in other companies

Has not previously worked in other companies


A third of incoming CEOs had an MBA and a tenth had a PhD

38



Incoming CEOs with and without selected degrees

2015

99%

30%

9%

70%

91%

MBA PhDUndergraduate

1%

No Yes


CEOs in the U.S./Canada were most likely to have an MBA

39

1) "Other Mature" economies include Argentina, Australia, Bahrain, Chile, Czech Republic, Hong Kong, Hungary, New Zealand, Poland, South Korea, etc.

2) “Other Emerging" economies include Egypt, Kazakhstan, Mexico, Nigeria, South Africa, Turkey, Vietnam etc.





Incoming CEOs with an MBA by region

2015

30%41%

35% 33% 32%26% 25%

70%59% 65% 67% 68% 74% 75%

97%

3%

U.S./Canada Other Mature1)Global JapanBrazil,

Russia, India

ChinaOther Emerging2) Western Europe

No MBA

Yes MBA


CEOs in the information technology industry were least likely to have an MBA

40




Incoming CEOs with an MBA by industry

2015

30%44%

38% 35% 33% 31% 29% 27% 26%18%

13%

70%

56%63% 65% 67% 69% 71% 73% 74%

82% 88%

Cross

industry

Consumer

staples

Consumer

discretionary1)

Utilities Information

technology

Telecom

services

Health careFinancialsIndustrialsEnergy Materials

Yes MBA

No MBA


Only 7% of incoming CEOs also held the position of chairman, a record low

41



Percentage of incoming CEOs who hold the joint title of CEO and chairman

2000–2015

9%

29%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

10%7%

14%

2011 20152012

Joint title share

2014

33%

19% 18%

2003 2004

13%

48%

2001 20092007

33%

2006 2010

26%

20022000 2005

33%

2008

12%

2013

12%

31%

Japan

Europe

North America China & Rest of Asia

Global Average


Women CEOs summary

Women CEOs take a step back. The share of incoming women CEOs fell to 2.8%, the lowest percentage since 2011. Just 10 of 359 incoming CEOs (permanent and interim) in the class of 2015 were women.

Women CEOs in the U.S./Canada slide to the bottom. The share of incoming women CEOs in the U.S./Canada fell for the third year to the lowest in the study’s history. There was just 1 woman of the total 87 (1.1%) incoming CEOs in the U.S./Canada.

Women CEOs are more often hired from outside the company than men CEOs are. 32% of incoming and outgoing women CEOs were outsiders compared to just 23% of men.

There is improvement. As of 2015, it is no longer statistically significant that women CEOs are more often forced out of office than men. Over the last 12 years, 32% of women CEOs have been forced out of office compared to 25% of men.

42


In 2015, the share of incoming women CEOs fell to 2.8%, the lowest since 2011

43

Note: Exhibit includes turnover events resulting from M&A and interims and excludes events with incomplete information.


Share of incoming women CEOs

2004–2015

5.2%

4.3%4.0%

3.5%3.4%

2.4%

0%

1%

2%

3%

4%

5%

6%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1.0%1.1%

2.6%

3.0%2.8%

2.1%

Incoming women CEOs

April 2016Strategy& | PwC 44



4.0%

7.3%7.1%

5.2%

0%

1%

2%

3%

4%

5%

6%

7%

8%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

6.2%

4.8%

2.7%

1.9%

4.7%

1.1%

2.0%2.4%

Incoming women CEOs

While the share of incoming women CEOs in the U.S./Canada fell for the third year to the lowest in the study’s history

Share of incoming women CEOs in the U.S./Canada

2004–2015


However, over the last 12 years, the U.S./Canada has hired the largest share of women CEOs

45



Note: "Mature" countries are defined as per the U.N. Development Programme 2015 ranking of countries with "very high human development" (human development index >0.80);




Percentage of incoming women CEOs by region

2004–2015

2.3%

3.1%

4.0%

3.0%

1.9%

0.9%

Other Emerging2) JapanBrazil,

Russia, India

Global

3.8%

ChinaOther Mature1) Western EuropeU.S./Canada

3.7%

Women CEOs


The consumer discretionary industry has hired the largest share of women CEOs

46




Percentage of incoming women CEOs by industry

2004–2015

1.0%

1.5%

3.0%3.3%

3.6%

4.5%

4.9%

3.0%

4.7%

Financial

Services

Consumer

Discretionary1)

1.6%

Cross

Industry

Information

Technology

Utilities HealthcareConsumer

Staples

Energy Materials

1.6%

Industrials

Women CEOs

Telecommuni-

cation

Services


In the U.S./Canada, the financials industry has hired the smallest share of women CEOs

47




Percentage of incoming women CEOs in the U.S./Canada by industry

2004–2015

1.1%

3.1%3.2%

4.1%

6.8%

10.0%

4.0%

Cross

Industry

Information

Technology

Consumer

Staples

8.5%

Consumer

Discretionary1)

HealthcareUtilities Materials Energy Financial

Services

2.3%

5.6%

Industrials

1.7%

Women CEOs

Telecommuni-

cation

Services


32%23%

68%77%

Male CEOsFemale CEOs

Women CEOs are more often hired from outside the company than men CEOs are*

Note: Exhibit excludes turnover events resulting from M&A for incoming CEOs, interims for incoming and outgoing CEOs, as well as turnover events with incomplete information.

*The chi-square statistic is 7.5107. The p-value is.006133. The result is significant at p <.05.


Incoming and outgoing CEOs by gender and pedigree

2004–2015

Insider CEOs

Outsider CEOs


From 2004 to 2015, women were 27 percent more likely to be forced out, but in 2015, for the first time, the difference was not statistically significant



Outgoing CEO by gender and pedigree

2004–2015

57% 62%

32% 25%

11% 13%

Ougoing male CEOsOutgoing female CEOs

M&A Forced turnover Planned turnover


Definition of terms

50

Succession: A succession event is defined as when a CEO leaves office, regardless of whether or not

a new CEO is selected to take his or her place, or when the company’s leadership structure changes to

add CEOs.

We group the succession reasons into three categories:

• M&A

• Forced

• Planned (successions that are the result of neither M&A nor a forced removal)

We determine whether a succession is forced or planned using reports in the press, analyst reports,

and the knowledge of Strategy& consultants from around the world.

Insider versus outsider CEO:

• Insider: A CEO is considered an insider if he or she worked at his or her current company at least

one day before becoming CEO.

• Outsider: A CEO is considered an outsider if he or she was hired directly from a company other than

the one he currently leads.

TSR: All total shareholder return figures we use are annualized TSR over the total tenure of outgoing

CEOs and are regionally adjusted, meaning that performance is measured relative to a regional index

(S&P 500, Brazil Bovespa, FTSE 100, CAC 40, etc.)


Methodol0gy

51

The CEO Success study identified the world’s 2,500 largest public companies, defined by their market

capitalization (from Bloomberg) on January1, 2015. We then identified the companies among the top

2,500 that had experienced a chief executive succession event between January 1, 2015, and

December 31, 2015, and cross-checked data using a wide variety of printed and electronic sources in

many languages. For a listing of companies that had been acquired or merged in 2015, we also

used Bloomberg.

Each company that appeared to have changed its CEO was investigated for confirmation that a change

occurred in 2015, and additional details — title, tenure, chairmanship, nationality, professional

experience, and so on — were sought on both the outgoing and incoming chief executives (as well as

any interim chief executives). Company-provided information was acceptable for most data elements

except the reason for the succession. Outside press reports and other independent sources were used

to confirm the reason for an executive’s departure.

Finally, Strategy& consultants worldwide separately validated each succession event as part of the

effort to learn the reason for specific CEO changes in their region. To distinguish between mature and

emerging economies, Strategy& followed the United Nations Development Programme 2015 ranking.

Total shareholder return data over a CEO’s tenure was sourced from Bloomberg and includes

reinvestment of dividends (if any). Total shareholder return data was then regionally market adjusted

(measured as the difference between the company’s return and the return of the main regional index

over the same time period) and annualized.

© 2016 PwC. All rights reserved.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see

www.pwc.com/structure for further details.

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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2015 CEO Success study - PwC · Source: Strategy& 2015 CEO Success study 11 28% 21% 17% 72% 79% 83% 0-4 years 4-8 years 8+ years Incoming insider CEO Incoming outsider CEO An outsider