The conclusion was drawn from an analysis of CEO turnover at 2,500 companies and 300 activist investor contests between 2011 and 2015.
Normal average CEO turnover was 16.6% within a year and 30.9% within two, the analysis found. But when an activist investor gained board seats, CEOs stood down 34.1% and 55.1% of the time in the respective periods.
And it turns out CEOs are more likely to leave even if activists don’t obtain board seats, with their mere presence in the company triggering an exit rate 71% greater than normal.
“It seems natural that there would be an increased rate of CEO turnover, but activists generally don’t publicly target the CEO for replacement,” FTI’s Steve Balet said.
American companies are increasingly being targeted by the likes of Carl Ichan and Dan Loeb, while recent research by Arizona State University shows female CEOs are four times more likely to find themselves in the cross-hairs.
CEOs keen to hold onto their jobs may want to consider these six preparation tips recently laid out in Chief Executive.