Boardrooms are moving more decisively. Spencer Stuart’s newly released CEO Transitions Report shows the highest level of CEO turnover in more than a decade, signaling a structural shift in how companies think about leadership durability, succession, and performance accountability. Evan Berta, an associate at Hunt Scanlon Ventures, examines what the findings mean for executive search firms, human capital advisors, and investors navigating a faster and less forgiving CEO market.
According to Spencer Stuart’s S&P 1500 CEO Transitions Report, 168 new chief executives were named across the index last year, the most since 2010. The surge reflects mounting board impatience with weak growth, activist pressures, AI-driven disruption, and a market environment that rewards speed over tenure.
Turnover was broad-based but especially pronounced among smaller companies, with SmallCap 600 transitions hitting a decade high. Technology, media, and telecom nearly doubled CEO transitions year-over-year, underscoring the pressure inside innovation-driven sectors.
“This isn’t random volatility,” said Evan Berta, an associate at Hunt Scanlon Ventures. “Boards are recalibrating what acceptable performance looks like in an environment where disruption is constant. The tolerance for underperformance is materially lower than it was even five years ago.”
Shorter Tenure, Faster Accountability
Average CEO tenure declined again last year, falling to 8.5 years, the lowest level since 2019. Nearly 40% of S&P 1500 CEOs departed within their first five years, and another 37% exited before reaching the 10-year mark.
“Boards are recalibrating what acceptable performance looks like in an environment where disruption is constant. The tolerance for underperformance is materially lower than it was even five years ago.”
The decline is particularly pronounced in the S&P 500, where nearly half of departing CEOs left within five years. As Spencer Stuart noted, performance divergence often becomes visible around years three to five, an inflection point where boards are increasingly willing to act.
“The CEO lifecycle has compressed,” Mr. Berta said. “Performance signals are surfacing earlier, activist scrutiny is more immediate, and AI-driven industry shifts are accelerating decision cycles. Boards are acting before issues metastasize.”
For executive search firms, this compresses the CEO lifecycle. Mandates are becoming more frequent, succession planning must be continuous, and leadership assessment needs to be forward-looking rather than reactive. In short: the grace period is shrinking.
The Return of the First-Time CEO
Perhaps the most striking finding is the dramatic return of the first-time CEO. In 2025, 84% of newly appointed S&P 1500 CEOs were serving in their first enterprise CEO role.
Of the 140 first-time CEOs appointed, the majority had no prior enterprise CEO experience, and nearly two-thirds had no prior public board service. New CEOs were also younger on average than in 2024, reflecting boards’ willingness to place earlier bets on emerging leaders.
The COO-to-CEO pipeline remained the dominant route, accounting for 48% of appointments, followed by divisional CEOs at 30% and CFOs at 9%.
“Boards are prioritizing adaptability and situational fit over pure résumé credentials,” Mr. Berta noted. “In fast-changing markets, the ability to scale, pivot, and execute may outweigh prior CEO tenure. That’s a fundamental shift in how leadership risk is being evaluated.”
“The CEO lifecycle has compressed. Performance signals are surfacing earlier, activist scrutiny is more immediate, and AI-driven industry shifts are accelerating decision cycles. Boards are acting before issues metastasize.”
Spencer Stuart’s own analysis suggests experienced CEOs may be better suited to turnaround or crisis environments, while first-time CEOs often outperform over time in growth scenarios.
Related: Pedigree vs. Performance: Rethinking How Private Equity Picks CEOs
This elevates the importance of contextual assessment, evaluating not just capability, but mandate alignment and runway.
Looking Inside Before Looking Out
The share of externally hired CEOs declined slightly to 40% in 2025, down from a historically high 43% in 2024. Large-cap companies in particular leaned heavily toward internal successors, while healthcare companies remained more likely to recruit externally.
Notably, 19 new CEOs were appointed directly from their company’s board, the highest number since 2020. While boards sometimes tap directors for continuity, this trend also raises questions about succession preparedness.
“The increase in director-to-CEO transitions suggests boards are leaning into familiarity during uncertainty,” Mr. Berta said. “But it also highlights the importance of structured succession planning. Emergency decisions are rarely optimal ones.”
The separation of CEO and chair roles continued, with fewer than 10% of new CEOs also named chair in 2025. Boards appear increasingly cautious about concentration of authority, reinforcing governance discipline during transitions.
Leadership Becomes a Valuation Variable
Spencer Stuart’s report makes one reality clear: CEO turnover is no longer episodic. It is structural. Boards are acting earlier. Tenures are shortening. First-time CEOs are rising. Internal pipelines are being tested under pressure. Governance structures are evolving.
For executive search firms, this means more mandates, but also higher expectations for assessment rigor and succession advisory. For investors, CEO durability becomes a measurable valuation variable.
“Leadership risk is increasingly underwriting enterprise value,” Mr. Berta concluded. “The firms that can model succession depth, assess adaptability, and align leadership to strategy before performance deteriorates will have a clear advantage.”
In a market where performance divergence shows up sooner and boards move faster, leadership risk has become one of the most consequential variables in enterprise value.
In a market where performance divergence shows up sooner and boards move faster, CEO transitions are no longer rare events.
They are defining moments, and increasingly, recurring ones.
Article By
Evan Berta
Evan Berta is Editor-in-Chief of ExitUp, the investment blog from Hunt Scanlon Ventures designed for professionals across the human capital M&A sector. Evan serves as an Associate for Hunt Scanlon Ventures, specializing in data analysis, market mapping, and target list preparation.
