Women CEOs of the last 10 years

The 2013 Chief

Executive Study

Not for publication

Under embargo until April 29, 2014

8am CET

Strategy&

For 14 years, Strategy& has examined CEO turnover and the incoming class of CEOs at the world’s largest 2,500 public companies. We focus on incoming and outgoing CEOs – rather than all CEOs – because determining what happens at critical decision points can help us understand what companies are looking for in their CEO and how the role is changing.

2

women have entered RU�OHIW�RĉFH

A total of

118

75%more women in

the incoming than outgoing classes

Over the last 10 years, there have been

1 3

By 2040, we project that women will make

up about

of new CEO appointments

This year, in addition to undertaking our usual analyses, we took a special look at our data on women CEOs over the past 10 years. A total of 118 women have entered or OHIW�RĉFH�DW�WKHVH�FRPSDQLHV�VLQFH������� Some trends:

• Women CEOs are still rare — just 3 percent of this year’s incoming class — but they are becoming more prevalent, and we expect that trend to accelerate. By 2040, we project that women will make up about a third of new CEO appointments.

• In terms of professional background, ZH�IRXQG�IHZHU�GLĈHUHQFHV�EHWZHHQ�IHPDOH�and male CEOs than we expected, but two particularly notable ones: Women are more often hired from outside their company, and women are more often IRUFHG�RXW�RI�RĉFH� Read more

CEO turnover at the largest 2,500 companies in 2013 was business as usual, with the turnover rate typical for non-recession years and an emphasis on planned changes:

v� �,Q������������SHUFHQW�RI�&(2V�OHIW�RĉFH�� a small decrease from 2012’s 15.0 percent EXW�KLJKHU�WKDQ�WKH�oYH�\HDU�DYHUDJH� of 13.9 percent.

• Just over 70 percent of changes at the top in 2013 were planned (not a result of M&A or of CEOs being forced out), a common level in recent years but nearly 20 percent higher than the average rate RI�VXFK�WUDQVLWLRQV�GXULQJ�WKH�oUVW�GHFDGH�of the century. Read more

Most of the new CEOs are familiar to the companies that hire them, a trend we discussed at length in last year’s study. In 2013:

• 76 percent were insiders — people promoted from within the company — and 26 percent had worked at only one company during their career.

• 58 percent joined their company from one in the same industry.

• 80 percent hailed from the country in which company headquarters were located.

• 65 percent did not have experience working abroad. Read more

Strategy& 3

4Strategy&

More women are becoming CEOs, slowly but surely

In eight out of the last 10 years, the proportion of women in the incoming class of CEOs has been larger than the proportion in the outgoing class, indicating that women CEOs are becoming more prevalent among the world’s largest 2,500 public companies.

• Over the last decade, there have been 75 percent more women CEOs in the incoming than outgoing classes.

v� �2YHU�WKH�SDVW�oYH�\HDUV��WKH�VKDUH�RI�ZRPHQ�in the incoming CEO class (3.6 percent)

was considerably higher than in the prior � oYH�\HDU�SHULRG������SHUFHQW��• Despite these trends, women made up

just 3.0 percent of the incoming class in 2013, a 1.3 percentage point drop from 2012.

'LąHUHQFH�EHWZHHQ�WKH�VKDUH�RI�LQFRPLQJ�ZRPHQ�&(2V�DQG�RXWJRLQJ�ZRPHQ�&(2V�����q��

-1.0%

0.0%

1.0%

2.0%

3.0%

1.8%1.2%

2.6%

-0.6% -0.4%

2.3%2.7%

0.1%

1.4%

0.5%

2004 2005 2006 2009 2010 2011 2012 20132007 2008

3HUFHQWDJH�RI�ZRPHQ�&(2V�LQ�LQFRPLQJ�DQG�RXWJRLQJ�FODVVHV�����q��

1.6%

2.8%

+75.0%

Outgoing CEOs Incoming CEOs

As much as one third of the incoming class of CEOs will be women by

2040, based on a 10 year trend in our data, ever higher education of

women, continuing entry of women into the business workforce, and

changing social norms of corporate leadership around the world.

Ken Favaro, Senior Partner

Strategy& 5

Where women lead

• Women lead companies in every region. Companies in the U.S. and Canada have had the highest percentage of women CEOs over the decade we studied (3.2 percent), and those in Japan have had the lowest (0.8 percent).

• Companies in the information technology, consumer staples, and consumer discretionary industries have had the highest percentages of women CEOs (3.1 percent, 2.6 percent, and 2.6 percent, respectively); the materials industry has had the lowest (0.8 percent).

3HUFHQWDJH�RI�LQFRPLQJ�DQG�RXWJRLQJ�ZRPHQ�&(2V�����q�� By company headquarters region

U.S. and Canada

Western Europe

Japan Other mature China Brazil, Russia, India

Other emerging

3.2%

1.4%

0.8%

2.5% 2.5%

1.7% 1.6%

By industry

Information Technology

Consumer Staples

Consumer Discretionary

Utilities Energy Financials Tele- communications

Services

Industrials Materials

3.1%

2.6% 2.6% 2.4%2.3%

2.1% 2.0%1.75%

0.8%

6

�7KH�GLĈHUHQFHV�RU�VLPLODULWLHV�FLWHG�RQ�WKLV�SDJH�DUH�VWDWLVWLFDOO\� VLJQLoFDQW�ZLWKLQ�D�S�YDOXH�RI�������7KLV�PHDQV�WKDW�WKHUH�LV� RQO\�D���SHUFHQW�SUREDELOLW\�WKDW�WKHVH�oQGLQJV�DUH�GXH�WR�FKDQFH�

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Women CEOs are more often hired from outside

Female Male

,QFRPLQJ�DQG�RXWJRLQJ�&(2V�E\�LQVLGHU�YHUVXV��RXWVLGHU�VWDWXV�DQG�JHQGHU�����q��

OutsiderInsider

22%

78%

35%

65%

In terms of professional background*, ZRPHQ�&(2V�DUH�GLĈHUHQW�IURP�WKHLU� male peers in that they are more often outsiders — new CEOs hired from outside the company (35 percent of women versus 22 percent of men).

Otherwise women CEOs have about the same professional backgrounds as their male peers in that they:

v� �5DUHO\�FRPH�IURP�D�UHJLRQ�GLĈHUHQW� from that in which company headquarters are located

• Only sometimes have experience working internationally

• Are of similar age

In addition, women, like men, are rarely granted a joint CEO/chairman title.

That women CEOs are more often outsiders may be an indication that

companies have not been able to cultivate enough female executives

LQ�KRXVH��6R�ZKHQ�ERDUGV�ORRN�IRU�QHZ�&(2V��WKH\�QHFHVVDULO\�oQG� a larger pool of female candidates outside their own organizations.

Gary L. Neilson, Senior Partner

���7KH�GLĈHUHQFH�LV�VWDWLVWLFDOO\�VLJQLoFDQW�ZLWKLQ�D�S�YDOXH� of 0.05. This means that there is only a 5 percent probability WKDW�WKLV�oQGLQJ�LV�GXH�WR�FKDQFH�

Strategy&

$PRQJ�&(2V�OHDYLQJ�RĉFH�RYHU�WKH�SDVW� 10 years, a higher share of women have been forced out than men (38 percent of women vs. 27 percent of men).*

+RZ�DQG�ZKHQ�ZRPHQ�OHDYH�RĆFH� They’re more often forced out

7

Female Male

2XWJRLQJ�&(2�VXFFHVVLRQ�UHDVRQ�E\�JHQGHU�����q��

11%

51%

38%

13%

60%

27%

M&AForcedPlanned

Strategy&

• In 2013, CEO turnover at the world’s 2,500 largest public companies decreased slightly, to 14.4 percent (from 15.0 percent in 2012).

• The percentage of planned turnovers remained high in 2013, reaching just over 70 percent, similar to the rate of planned turnovers since 2010 but nearly 20 percent higher than the rate between 2000 and 2009.

• Among regions, the highest turnover rates were in Brazil, Russia, and India (at 21.1 percent).

• Among industries, the highest turnover rate was in telecommunications services (at 22.1 percent).

• Both the regional and industry trends have held for three years.

Changes at the top in 2013

The high proportion of planned turnovers is a strong signal that

companies are continuing to take an active, considered approach

to putting in place new leadership.

Gary L. Neilson, Senior Partner

&(2�WXUQRYHU�HYHQWV�DV�SHUFHQWDJH�RI�WRS�������SXEOLF�FRPSDQLHV�E\�VXFFHVVLRQ�UHDVRQ

8%

6%

4%

2%

0%

10%

12%

14%

16%

2000 2001 2002 2003 2004 2007 2008 2009 2013

12.9%

10.9% 10.8%9.8%

14.7%15.4%

14.4% 14.4% 14.3%

11.6%

14.2%15.0% 14.4%

13.8%

6.4%6.0% 5.0%

5.3%7.7% 6.8% 7.2%

9.1%10.1%

3.4%2.4% 4.4% 3.2%

4.5%

4.2%5.1%

3.4%

2.6%

3.2%

2.4% 1.4%1.3%

2.5%

2005

9.2%

3.6%

2.6%

2006

6.6%

4.6%

3.2%2.2% 1.8%

2010

7.7%

2.2%

1.8%

2011

9.8%

2.2%

2.2%

2012

10.8%

2.8%

1.4%1.7%

2.8%

8

M&AForcedPlanned

Strategy&

Changes at the top in 2013 continued

9

&(2�WXUQRYHU�UDWH�LQ����� By company headquarters region

M&AForcedPlanned

Average 14.4%

U.S. and Canada

13.2%

Japan

15.0%

Western Europe

12.9%

Brazil, Russia, India

21.1%

Other emerging

13.4%

China

16.9%

Other mature

15.7%

9.1%

1.6%

2.4%

1.0%1.4%12.6%2.2%

6.7%

4.1%

5.4%

13.9%2.2%

10.4%

0.7%0.7%

1.9%

14.5%

0.5%

2.8%1.4%

11.4%

1.8%

By industry

M&AForcedPlanned

Tele- communications

Services

22.1%

Consumer Staples

16.9%

Materials

16.6%

Financials

14.5%

Information Technology

14.1%

Industrials

13.3%

Consumer Discretionary

12.5%

Utilities

12.4%

12.6%

6.3%

3.2%

11.9%1.7%

3.3%

11.6%

3.1%

1.9%

10.8%

2.7%1.0%

9.0%

3.0%

2.0%

9.8%

2.2%1.4%

8.5%

2.7%1.2%

11.1%

5.9%

3.7%

1.8%

Energy

11.4%

Average 14.4%

0.7%0.7%

Companies continue to select CEOs who are familiar faces, particularly

when it comes to nationality and international experience, suggesting

that the ‘global CEO’ is more mythical than real.

3HU�2OD�.DUOVVRQ��6HQLRU�3DUWQHU

CEOs in 2013’s incoming class were mostly familiar to their companies (we found this WR�EH�WUXH�RYHU�WKH�SDVW�oYH�\HDUV��DQG�oUVW�reported on it at length in last year’s study):

• 76 percent of 2013’s new CEOs were insiders (compared to 71 percent in 2012), and a full 26 percent had worked at only one company (compared to 25 percent in 2012).

• 80 percent of incoming CEOs were from the same country as that in which company headquarters are located, slightly lower than 2012’s 81 percent.

• 65 percent did not have experience working abroad, a 10 percentage point increase from the previous year.

• 58 percent had joined their company from one in the same industry, almost the same as 2012’s 55 percent.

• The median age remained at 53.

2013’s incoming class of CEOs

Familiar faces

10Strategy&

,QFRPLQJ�&(2V�LQ����� By insider versus outsider status By nationality compared to company

headquarters region

%\�SUHYLRXV�H[SHULHQFH�LQ�GLąHUHQW�UHJLRQ� compared to company headquarters region

%\�VDPH�RU�GLąHUHQW�SULRU�LQGXVWU\�FRPSDUHG� to current company industry

76% 24%

OutsiderInsider

Has worked in other regionsHas not worked in other regions

65%

35%

1VPULK�MYVT�KPɈLYLU[�PUK\Z[Y`Joined from same industry

58%

42%

80% +PɈLYLU[�JV\U[Y �̀�ZHTL�YLNPVUSame country, same region

+PɈLYLU[�JV\U[Y �̀�KPɈLYLU[�YLNPVU5% 15%

The share of the incoming class appointed with a joint CEO/chairman title has steadily decreased since the beginning of our study and reached an all-time low of 9 percent in 2013.

2013’s incoming class of CEOs

Titles and education

The share of incoming CEOs with MBAs increased by nearly 50

percent between 2003 and 2013 — a trend we expect will continue.

Ken Favaro, Senior Partner

11Strategy&

3HUFHQWDJH�RI�LQFRPLQJ�&(2V�ZKR�DOVR�KROG�WKH�SRVLWLRQ�RI�FKDLUPDQ

45%

25%

20%

15%

10%

5%

0%

50%

30%

55%

35%

60%

40%

65%

7%7%9%

15%

5%

53%

39%

33%

40%

2%

52%

30%

33%

0%0%

2%

50%

61%

48%

18%

33%

48%

63%

2%

33%

33%

44%

32%

31%

18%

16%

37%

29%

25%25%

16%

38%

26%

19%

20%

13%

26%

15%19%

23% 24%

31%

18%

11%

10%

14%17%

9%

5%

13%

20%

14%

0%

9%

12%

7%

6%

16%12%

18%

17%18%

0%

14%

20%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

North America Europe Japan China & Rest of Asia Global Average

,QFRPLQJ�&(2V�E\�0%$�HGXFDWLRQ������DQG�����

Has MBADoes not have MBA

2003 2013

72%

28%81%19%

12

v� �2XWJRLQJ�&(2V�PHGLDQ�WHQXUH�LQ�RĉFH�KDV�been relatively steady for the past six years. ,W�LQFUHDVHG�VOLJKWO\�LQ������WR�oYH�\HDUV�

• Typically, outgoing CEOs who were insiders when they became CEO deliver higher shareholder returns. In 2013, however, outsiders generated about the same returns as insiders (mainly due to high shares of highly performing outsiders in North America and in the consumer staples industry).

&(2V�ZKR�OHIW�RĆFH�LQ������

2XWJRLQJ�&(2V�PHGLDQ�VKDUHKROGHU�UHWXUQV�E\�LQVLGHU�YHUVXV�RXWVLGHU�VWDWXV�����q��

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

7%

3%2%1%0%

-1%-2%-3%-4%-5%

8%

4%

9%

5%

10%

6%

11%

3.7%

3.9%

-3.0%

-4.6%

0.1%

4.1%

4.6%

3.1%2.4%

-1.2%

0.5%0.3%

3.9%

11.0%

4.1%

5.6%

1.5%

-0.6%

3.9%2.9%

0.1%

2.2%

-0.3%

0.7%

4.6%4.6%4.0%

0.6%

InsiderOutsider

Strategy&

Strategy& 13

• CEOs who generate the lowest returns to shareholders are more often forced out (32 percent for the lowest quartile performers vs. 14 percent for the top quartile performers), and their companies more often hire outsiders to replace them (31 percent vs. 23 percent).

• When outgoing CEOs remained or became chairmen in a planned turnover – what we call apprenticing incoming CEOs – 89 percent of incoming CEOs were insiders in 2013 (up from 79 percent in 2012).

One CEO to the next

When a CEO is forced out, appointing a new CEO is a time-sensitive

GHFLVLRQ��&RPSDQLHV�WKDW�GR�QRW�KDYH�HąHFWLYH�VXFFHVVLRQ�SUDFWLFHV�LQ�SODFH�PRUH�RIWHQ�KDYH�WR�UHO\�RQ�RXWVLGHUV�WR�oOO�WKH�SRVLWLRQ�TXLFNO\��These companies may also be looking for new ideas.

3HU�2OD�.DUOVVRQ��6HQLRU�3DUWQHU

,QFRPLQJ�&(2�LQVLGHU�YHUVXV�RXWVLGHU�VWDWXV�E\�IRUFHG�YHUVXV�SODQQHG�GHSDUWXUH�RI�RXWJRLQJ�&(2V��DQG�TXDUWLOH�RI�DQQXDOL]HG�VKDUHKROGHU�UHWXUQV�RYHU�RXWJRLQJ�&(2V�WHQXUH�����q��

OutsiderInsider

69%

73%

68%

31%

27%

32%

Planned 68%

Total 100%

Forced 32%

Bottom quartile

81%

77%

82%

19%

23%

18%

Planned 81%

Total 100%

Forced 19%

Second quartile

80%

62%

82%

20%

38%

18%

Planned 89%

Total 100%

Forced 11%

Third quartile

77% 79%

23%

35%

21%

Planned 86%

Total 100%

Forced 14%

Top quartile

65%

Strategy& 14

About the authors

Ken Favaro

Ken Favaro is a Strategy& Senior Partner and the global lead for its Enterprise Strategy group. His expertise covers corporate and business strategy, strategic innovation, and organic growth. Ken works across all industries, particularly in the consumer, retail, healthcare, and oQDQFLDO�VHUYLFHV�LQGXVWULHV�

“Women are becoming more prevalent at the top of the world’s largest companies — a trend that will only continue to grow. Companies need to plan how they will seek out and prepare their future women CEOs for leadership.”

Per-Ola Karlsson

%DVHG�LQ�'XEDL��3HU�2OD�.DUOVVRQ�is a senior partner with 25 years of consulting experience. His main areas of expertise are strategy formulation, organizational development, corporate center design, and governance. In addition, he frequently supports companies in the areas of change management and people capabilities building.

“Our research shows that on the whole, insider CEOs generate higher returns over their tenures than outsider CEOs, so companies seeking to hire women PD\�EHQHoW�IURP�ORRNLQJ�LQVLGH�PRUH�often than they do today.”

Gary L. Neilson

Gary L. Neilson is a senior partner EDVHG�LQ�6WUDWHJ\V�&KLFDJR�RĉFH�� He has 30 years of experience with WKH�oUP�DQG�IRFXVHV�RQ�KHOSLQJ� Fortune 500 companies with operating model transformation challenges. 0RUH�VSHFLoFDOO\��KH�ZRUNV�ZLWK� clients on organizational design, FRVW�UHVWUXFWXULQJ��DQG�HQWHUSULVH� wide transformation programs. He serves clients across all industries, including consumer, healthcare, oQDQFLDO�VHUYLFHV��WUDQVSRUWDWLRQ��industrials, and energy.

“The share of joint appointments as CEO and chairman is once again at a low level, a sign of good governance UHpHFWLQJ�LQFUHDVHG�DFFRXQWDELOLW\� DQG�GHFUHDVHG�FRQpLFWV�RI�LQWHUHVW��This is one of the longest-lasting trends we’ve seen over the past 14 years.”

Strategy& 15

7KLV�VWXG\�LGHQWLoHG�WKH�ZRUOGV�������ODUJHVW�SXEOLF�FRPSDQLHV��GHoQHG�E\�WKHLU�market capitalization (from Bloomberg) on January 1, 2013. Our research team PHPEHUV�WKHQ�LGHQWLoHG�WKH�FRPSDQLHV�among the top 2,500 that had experienced a chief executive succession event 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 2013, we also used Bloomberg.

Each company that appeared to have changed LWV�&(2�ZDV�LQYHVWLJDWHG�IRU�FRQoUPDWLRQ�WKDW� a change occurred in 2013, and additional details — title, tenure, gender, chairmanship, nationality, professional experience, and so on — were sought for both the outgoing and incoming chief executives (as well as any interim chief executives).

&RPSDQ\�SURYLGHG�LQIRUPDWLRQ�ZDV�DFFHSWDEOH�for most data elements except the reason for the succession. Outside press reports and other LQGHSHQGHQW�VRXUFHV�ZHUH�XVHG�WR�FRQoUP� the reason for an executive’s departure. Finally, Strategy& consultants worldwide separately validated each succession event as part of WKH�HĈRUW�WR�OHDUQ�WKH�UHDVRQ�IRU�VSHFLoF�&(2�changes in their region.

To distinguish between mature and emerging economies, Strategy& followed the United Nations Development Programme 2013 ranking.

Total shareholder return data for a CEO’s tenure was sourced from Bloomberg and includes reinvestment of dividends (if any). Total shareholder return data was then UHJLRQDOO\�PDUNHW�DGMXVWHG��PHDVXUHG�DV�WKH�GLĈHUHQFH�EHWZHHQ�WKH�FRPSDQ\V�UHWXUQ� and the return of the main regional index over the same time period) and annualized.

www.strategyand.pwc.com/chiefexecutivestudy

Methodology

Strategy& 16

Contacts

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Anna Moreno ���������������� anna.moreno @strategyand.pwc.com

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Deborah Frattini ����������������� deborah.frattini @strategyand.pwc.com

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Monique De Meyere ���������������� monique.demeyere @strategyand.pwc.com

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Deirdre Flynn ���������������� GHLUGUH�p\QQ @strategyand.pwc.com

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Davina Zenz-Spitzweg ����������������� GDYLQD�]HQ]�VSLW]ZHJ @strategyand.pwc.com

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Beatrice Malasset ����������������� beatrice.malasset @strategyand.pwc.com

Stockholm

Linda Wase ����������������� linda.wase@contractors.strategyand.pwc.com

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.DUOD�6FKXO]H�2VWKRĈ� ���������������� NDUOD�VFKXO]HRVWKRĈ @strategyand.pwc.com

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Joanne Alam ��������������� joanne.alam @strategyand.pwc.com

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Michelle Wang ����������������� michelle.wang @strategyand.pwc.com

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Tomoko Hama ���������������� tomoko.hama@contractors.strategyand.pwc.com.

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Kristine Anderson ���������������� kristine.anderson @strategyand.pwc.com

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