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As the worldwide economy began to recover last year, CEO turnover at the world’s largest 2,500 public companies returned to rates seen during the pre-recession years, according to Booz & Company’s 12th annual CEO Succession Study.

In 2011, 14.2 percent of CEOs at the world’s largest companies were replaced, which matches the historical seven-year average of just more than 14 percent, but is sharply higher than the 11.6 percent turnover rate in the crisis year of 2010.

“Boards are more likely to keep their chief executives during times of economic uncertainty in order to maintain stability, but they are more willing to make a leadership change when macroeconomic strength returns and company outlooks improve,” said Per-Ola Karlsson, Booz & Company Senior Partner. “That the overall turnover rate is back to historical levels suggests that some companies are making a real effort to rethink strategy and drive performance.”

CEO turnover rate was highest among the top 250 companies by market capitalisation—an average of more than 14 percent over 12 years—and nearly 2 percentage points higher than among companies ranked 251–2,500 by market capitalisation between 2000 and 2011.

Between 2009 and 2011, outgoing insider CEOs—that is, those who had risen up through the ranks at the same company—delivered a 4.4 percent annual shareholder return above local market indices, on average, compared to just a 0.5 percent return from outsiders.

The survey finds that appointment of outsider CEOs remains high. In 2011, 22 percent of new CEOs came from outside their organization. This is consistent with 2010 and 2009 findings, but is significantly more than the 14 percent of outsiders appointed in 2007.

“The rate of outsiders appointed as CEO is demonstrably higher than it was before the recession began, which suggests that companies are seeking leadership experience from outside their industries and markets," says Ken Favaro, Booz & Company Senior Partner.

However, the study finds that insider CEOs continue to perform better, bringing higher shareholder returns and serving longer tenures.

“As the rate of CEO turnover returns to historical levels, we are seeing executives face more intense pressure to perform during their first year,” said Gary Neilson, Booz & Company Senior Partner.

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