Does making a CEO change improve company performance?

Hiring a new CEO can improve performance, but it’s not a magic bullet.

When a company underperforms, its board of directors has several tools at its disposal.

The most obvious and externally visible of these—and the one that’s generally perceived to have the greatest impact—is, of course, replacing the CEO.

Over the past 10 years, in fact, there have been nearly 600 CEO changes within the S&P 500. Despite talk of increased turnover, new CEO appointments have been steady. In any given year between 2016 and the end of 2025, between 10% and 13% of S&P 500 companies appointed a new CEO.

But did hiring a new CEO actually make a material difference for these companies in terms of performance? And, by extension, what can boards currently considering a CEO change reasonably expect as a result?

In short, our research found that hiring a new CEO can improve performance, but it’s far from a magic bullet.

Specifically, we found that companies that elected to bring in their current CEO were (not surprisingly) underperforming S&P 500 average total shareholder returns (TSR) by a significant margin in the two years before making the change. But in the two years that followed, the data shows that the new CEOs, on average, improved results but failed to outperform the S&P 500 average TSR.

One interesting caveat: The gains made by hiring a new CEO within certain key S&P 500 sectors (consumer goods, to cite one specific example) were indeed impressive. But in other sectors, company performance actually declined further following transitions, underscoring our key takeaway that CEOs can sometimes impact performance but not reliably so.

While retirements, resignations, and removal for reasons other than performance do indeed account for some percentage of CEO turnover, our research shows that new CEOs, regardless of the exact reason they landed in the role, typically inherit underperforming companies.

Specifically, in any given year over the past decade, S&P 500 companies that hired today’s CEOs underperformed the S&P 500 average TSR over the previous 24 months by an average of 12.09 percentage points, weighted by industry sector.

Our biggest question, however—and the one that was the genesis of this study—was “What impact, on average, did today’s CEOs have on their company’s performance after taking over?”

The answer? They gained ground but did not break through.

In the 24 months following the current CEO’s arrival, those companies had narrowed the gap to the S&P 500 average TSR but still lagged by 5.2 percentage points.

But the performance of today’s CEOs varied by sector. Companies that appointed today’s CEOs in consumer markets, utilities, and energy performed much better than the overall S&P 500 results.

Companies that hired today’s CEOs in technology, media and telecommunications (TMT) and financial services lagged badly.

For boards, the numbers sound a cautionary note. Yes, replacing a CEO can make a difference. But achieving outperformance likely requires more than a new leader.

The profile of a “typical” new CEO continues to vary from industry to industry and company to company. But when looking at CEO hiring across the entirety of the S&P 500, several truisms have clearly emerged:

1. The vast majority of them—four out of every five—are selected from within the hiring company’s own ranks.
2. Their age is relatively unchanged, though there are indications that in recent years, they’ve gotten somewhat younger.
3. New CEOs are (still) almost always men.

Concerning age: Over the past 10 years, starting in 2016, the typical age of a newly hired CEO held essentially steady in the mid-50s, on average. Over the last two years, however, there’s some indication of a shift to younger CEOs, with the average age of new S&P 500 CEOs falling from 56.4 in 2024 to 54.4 in 2025. The influence of the tech sector or of AI may be in play, but it remains to be seen whether this shift represents a blip or a trend.

With respect to gender, despite continued public calls for more women in the C-suite, men continue to be prominent in CEO appointments, at least within the S&P 500. From 2016 through 2025, only about one in ten CEO jobs have gone to women in any given year, on average. Last year, just six percent of CEOs hired by S&P 500 companies were women. And as of December 31, 2025, of current S&P 500 CEOs, eight percent were women.

Boards of directors also continue to have a preference toward selecting CEOs from within. Only 20% of the CEOs appointed over the last decade have been company outsiders.

What is clear from the data, though, is that companies, on balance, aren’t hesitant to replace a CEO. In fact, half of today’s CEOs have been appointed within the last five years. There have been nearly 600 CEO changes within the S&P 500 since 2016, with at least 10% of companies appointing a new CEO in each of those past 10 years.

This steady churn means that the average tenure of S&P 500 CEOs has held relatively steady at roughly 7.5 years over that period, and that 50% of today’s S&P 500 CEOs have been in the role five years or less.

Interestingly, in several sectors, the impact of installing today’s CEOs was significant. In several other sectors, though, installing today’s CEOs coincided with further performance downturns.

S&P 500 companies in the technology, media and telecommunications (TMT) sector had the worst track record (compared to all other major sectors) when it came to the way the appointment of today’s CEOs impacted TSR.

TMT companies that appointed today’s CEOs trailed the S&P 500 sector average TSR by 9.9 percentage points in the two years before making a change. In the two years afterward, their performance cratered. They trailed the S&P 500 average TSR by a whopping 25.1 percentage points.

The findings may reflect the sector’s volatility—and may also suggest that TMT sector CEO turnover can indicate more serious operating problems, a possibility when you consider that many of the most notable TMT CEOs are long-serving.

Financial services companies that appointed today’s CEOs also performed worse after the transition, on average. In the two-year periods before the appointments, the S&P 500 financial services companies that hired today’s CEOs were nearly even with their peers. They trailed the S&P 500 sector average TSR by just 1.8 percentage points. In the two-year periods after the appointments, it was a different story. Those companies trailed the S&P 500 sector average TSR by 17.4 percentage points.

Consumer markets companies that appointed today’s CEOs, on the other hand, came from far behind and outperformed the sector average. In the consumer markets sector, changing CEOs may be something of a magic bullet. In the two-year periods before appointing their current CEOs, S&P 500 consumer markets companies that made the change trailed the S&P 500 sector average TSR by 12.8 percentage points. In the two-year periods after the appointments, they not only drew even but also surged ahead, outperforming the S&P 500 sector average TSR by 7.5 percentage points.

That was among the biggest performance improvements we tracked—but not the only one.

Utilities companies that appointed today’s CEO were ahead to begin with—then widened the lead. S&P 500 utilities companies that appointed today’s CEOs were ahead of their peers—and then performed better. In the two-year periods before the appointments, the utilities companies that hired today’s CEOs were already 1.1 percentage points ahead of the S&P 500 sector average TSR. In the two-year periods after the appointments, they built on their lead—outperforming the sector average by 12.8 percentage points.

In other industry sectors—the healthcare, industrials/materials, and energy sectors, specifically—companies that appointed today’s CEOs narrowed the gap, slightly outperformed or drew even with the sector average.

• Healthcare companies that appointed today’s CEOs came from 15.6 percentage points below the sector average. In the two-year periods after the appointments, they were nearly even—just 1.4 percentage points behind.

• In the industrials/materials sector, the results were similar. Companies that appointed today’s CEOs closed an 18.1 percentage point gap. In the two-year periods after the appointments, they drew almost even with the sector average, trailing by just 0.6 percentage points.

• Energy sector companies that appointed today’s CEOs demonstrated the biggest performance improvement of all. Trailing the sector average by 30.3 percentage points in the two-year periods following the appointments, they outperformed the sector average by 11.2 percentage points in the subsequent two-year periods.

The sector-to-sector differences are intriguing and invite additional exploration. What does seem evident is that, both for the individual sectors and for the S&P 500 overall, a CEO change can impact medium-term performance, but only to an extent. This may also be an invitation for boards to develop new ways to support new CEOs.