Corporate boards should not show CEOs the door prematurely

Subscribe to enjoy similar stories. When Unilever made its surprise announcement last week that it would replace chief executive officer (CEO) Hein Schumacher, the board was about as blunt as boards tend to get in a corporate press release. “While the Board is pleased with Unilever’s performance in 2024, there is much further to go to deliver best-in-class results," said Unilever chairman Ian Meakin in the announcement.

Schumacher will be replaced by current Unilever chief financial officer (CFO) Fernando Fernandez, who has the ability “to drive change at speed" and capitalize on the company’s growth plan “with urgency." It all came down to that one word, much beloved by Wall Street: urgency. In the end, the board decided that if Schumacher was not going to move fast enough, it would. Just 20 months into his tenure, Schumacher was out.

It’s not fun for a board to replace a chief executive, which is why CEOs often hold onto their jobs longer than they should. Big transitions can open up a company to big risks, and a board never quite knows how chief executives will perform until they’re in the chair. But in this age of urgency, driven by impatient shareholders, boards are giving their CEOs less time to execute their business strategies or turn things around before deciding it’s time to move on.

I’ll diagnose it as a serious case of corporate FOMO—fear that if they don’t have the right leader in place, they will miss out on the opportunities that can come in rapid moments of change. While that risk might be real, boards need to balance that against pushing out talented executives before they have time to deliver results. “More than I’ve ever seen, boards will say their companies are at a crossroads right now," said Jim