Replacing a CEO isn’t just switching out a leader
Replacing a CEO isn’t just switching out a leader. It’s one of the biggest shocks a company can absorb — the kind that quietly reshapes operations, capital allocation, and the story the market thinks it understands.
And the costs stack up quickly:
➤ The median ousted CEO leaves with roughly $6.2M before board-level extras
➤ Successors often require $9M+ in incentives just to take the job
➤ Markets don’t react to the change — they react to the uncertainty around it
➤ When boards rush the handoff, value dilution doesn’t happen overnight… it seeps in slowly
Here’s what most investors underestimate:
A CEO transition is one of the most expensive governance decisions a board makes, yet it’s rarely modeled with the same rigor as a capex cycle, a margin reset, or a credit downgrade.
If leadership drives execution alpha, then transition risk needs its own line item — not a footnote.
How are you pricing it into your view?