Activists Show Leaders the Door

A record number of CEOs left their jobs in 2024, and it turns out that a historic number departed not of their own accord.

A record 27 CEOs resigned or were forced out last year at mid- and large-sized companies targeted by activist investors, according to investment bank Barclays—nearly triple the number in 2020. Several other boards forced out their bosses in anticipation of campaigns after activist-minded investors took stakes in their firms.

Experts say top bosses—and their boards—should expect more of the same in 2025. The number of activist campaigns is either near or at record levels, depending on how they are tracked. “The patience level from activists is short,” says Sharon Egilinsky, partner in Korn Ferry’s Organizational Strategy business.

The relatively slow market for mergers and acquisitions made it difficult for leaders to grow top-line revenues. Inflation and a push to add new technologies increased costs at many companies. That made a focus on productivity more important as a way to increase profitability, and in turn, raise the company’s stock price. The broad stock market’s good performance made laggards stick out.

So when activist investors felt like C-suites weren’t doing enough, they pounced. The 243 activist campaigns in 2024 mark the highest global total since 2018’s record of 249, according to Barclays data.

To be sure, experts say that despite their reputation, activist campaigns can sometimes be helpful in offering a different perspective on solving problems. But they also point out that, to some degree, boards and executives have brought this upon themselves, by becoming complacent and risk averse. In the meantime, changes a few years ago to US securities regulation have made it easier for activist investors of all sizes to wage proxy battles. These changes will continue to encourage activists with smaller war chests to take stands, says Joe Griesedieck, Korn Ferry vice chairman and managing director of its Board and CEO Services practice.

Even if the merger market rebounds, activist investors aren’t likely to go away. There are now decades of evidence that shareholders don’t often reap the full benefits of deals, says Tierney Remick, Korn Ferry vice chairman and co-leader of its Board and CEO Services practice. “Underperformance or slower gains will bring out criticism from shareholders,” she says.

Experts say CEOs should see 2024’s activist activity—and subsequent CEO force-outs—as wake-up calls to be more aggressive in either growing firms or reining in costs. For boards, this year will be defined by how successfully they can shift from the stabilization mode of the last few years to making changes themselves, Griesedieck says. “If boards are asking the right questions and not getting a satisfactory response from management, change is inevitable,” he says.

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