More CEOs join ‘Great Resignation’ as recession looms

The “Great Resignation” isn’t just about COVID-19 burnout anymore. Corporate CEOs are quitting their jobs in a new exodus as political pressures and expectations of a recession build, employment watchers say.

Challenger, Gray & Christmas reports that 668 chief executive officers left their jobs between January and May, the highest total for that period since the executive outplacement firm began tracking monthly CEO changes in 2002. That’s up 24% from the 539 during the same period last year and 6% from the previous high of 627 exits during the first five months of 2019.

Economist Daniel Lacalle, a professor at IE Business School in Spain, said many CEOs are leaving because it’s more profitable to resign than remain as the economy worsens.

“As an investor, I find that some CEOs are resigning as the compensation in shares does not make it worth staying in the job when markets are falling and pressure from the media sometimes makes stock options look like something bad,” Mr. Lacalle said.

As part of their contracts, departing chief executive officers receive lucrative “golden parachutes” that Mr. Lacalle said are hard to calculate because the dollar amount “varies massively.”

“Usually, it is between five and six years of annual compensation including all benefits. Sometimes they get a board seat or an advisory role in a subsidiary,” Mr. Lacalle said.

At the end of last year, Moderna’s board of directors approved a golden parachute for CEO Stephane Bancel worth more than $926 million, up from $9.4 million in 2019 before the pandemic.

The package includes a $1.5 million cash severance payment and a $2.5 million bonus if he loses his job in a sale of the company, whose shares have skyrocketed since the FDA approved its COVID-19 vaccine.

According to the latest statistics from the Bureau of Labor Statistics, 4.3 million Americans quit their jobs in May, about the same as the 4.4 million who quit in April and the record 4.5 million who quit in November.

Many jobs remain available as Americans jostle for better-paying work to cope with record-high inflation. In its monthly jobs report on Friday, the Department of Labor said the economy added 372,000 jobs in June while the unemployment rate held steady at 3.6%.

Fears of a looming recession aren’t the only things making life harder for CEOs, according to investors.

There’s also growing political pressure to take sides on hot-button issues including advocacy for transgender people and whether companies should pay for employees’ travel out of abortion-restricting states to terminate pregnancies.

In May, Netflix told left-leaning employees in an internal memo to quit if they are offended by the streaming giant’s choice to feature a “diversity of stories, even if we find some titles counter to our own personal values.”

According to a Trafalgar Group poll released on May 16, 87.1% of likely voters from all political affiliations said they were either very or somewhat likely “to stop using a product or service of a company that openly advocates for a political agenda” that contradicts their beliefs.

Investor William Flaig, CEO of the American Conservative Values ETF which boycotts various companies, said in an email he believes mounting pressure from environmentalists and increased government regulations “are taking a toll on CEOs and senior executives.”

Paul Chesser, director of the conservative National Legal and Policy Center’s Corporate Integrity Project, said CEOs “face increasing hostility over their involvement in politics” from conservatives who hadn’t been very involved before.

“Executives now feel the heat from the conservative side over their ‘woke’ advocacy for things like the militant LGBT agenda and critical race theory, as exemplified by the doubling of conservative shareholder resolutions during this year’s proxy season for corporations,” Mr. Chesser said Friday.

CEO departures have included Amazon’s Jeff Bezos last July and American Airlines’ Doug Parker, who stepped down on March 31 amid an industry labor shortage that has fueled months of flight delays and cancellations.

Resignations have continued into this summer.

Bloomberg News reported on June 28 that Andrew Formica, CEO of the $68 billion investment firm Jupiter Fund Management, was quitting to “do nothing at the beach.” That same day, e-commerce website Pinterest said its CEO, Ben Silbermann, was stepping down.

Yannis Moati, CEO of the New York City-based Hotels by Day booking service, said many CEOs are seeking “a greater sense of purpose” amid post-pandemic financial and political pressures.

“I can tell you that there’s a palpable feeling in the executive circles that life needs to be better balanced between hard work and lifestyle,” Mr. Moati said Friday.