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UK finance firms see rapid turnover of CEOs

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UK finance firms see rapid turnover of CEOs

The churn rate of CEOs at major U.K. companies has increased sharply since the turn of the century, although finance firms are better than others in terms of executive retention, according to a survey from recruitment specialists Heidrick & Struggles based on 2016 figures.

The study shows that the frequency of CEO transitions at global firms has steadily increased, to 9.3% in 2016 from 3.4% in 2001. Among firms in the FTSE 100 and FTSE 250 indexes of leading U.K. companies, the churn rate was 16.5% in 2016. For banks, insurance firms, private equity companies and investment companies in the two U.K. indexes, the figure was 15.4%.

Heidrick & Struggles looked at appointments in the combined FTSE 350 index of leading companies in the U.K. and at global companies with $1 billion or more in annual revenue.

At the U.K.'s biggest finance companies in the FTSE 100, just 23% of CEOs had been in their post for more than five years, while 13.5% had remained for over a decade.

The survey also showed that almost three-quarters of CEOs in all FTSE 100 firms were promoted from within their respective companies, which Heidrick & Struggles said is a "lower risk and lower cost" option than appointing from outside.

For FTSE 100 finance firms, however, the figure was much lower with just 50% of CEOs promoted internally over the past five years.

Finance CEOs in the leading index also tended to be older than their peers in other sectors, with an average age of nearly 57 for those appointed in the past five years compared with 54 years for those from other sectors.

The overwhelming majority of CEOs in Heidrick & Struggles' survey of global firms will fulfill only one role as CEO, with only 13 in every thousand in the survey going on to take up another equivalent position.

"What this research shows is just how insecure a CEO's position is," said Jenni Hibbert, regional managing partner for financial services at Heidrick & Struggles.