The incoming class of CEOs in 2012 is the largest in the study’s 13-year history. And for the most part they’re familiar faces: companies promoted people from within 71 percent of the time; 25 percent of incoming CEOs had worked at the same company for their entire career; 81 percent had the same nationality as the company’s headquarters; and 95 percent were men. In other words, one of our most interesting findings is that the “global CEO” seems more myth than reality.

1. strategy+business
FORTHCOMING IN ISSUE 71 SUMMER 2013
BY KEN FAVARO, PER-OLA KARLSSON,
AND GARY L. NEILSON
PREPRINT 00184
THE 2012 GLOBAL CHIEF EXECUTIVE STUDY
Portrait of the
Incoming Class
The newest CEOs have neither the diversity nor the global backgrounds that
you might expect.

2. featurestrategy&leadership
1

3. For the most part, they are familiar faces. The ma-
jority of them were promoted from within the company
they now run. Less than half of the new chief executives
have spent any time at all working outside their com-
pany’s home region. And almost all of them are middle-
aged men.
This snapshot of the 2012 incoming class of chief
executives puts to rest, at least for this year, the notion
that the CEO candidate most likely to be hired is the
one with the highest level of global diversity. The data
also offers an indication of growing leadership stabil-
ity at the top of large companies, and our conversations
with CEOs have frequently confirmed that point of view.
The most notable characteristic of the 2012 class
members is their collection of resumes. Of the 300 new
CEOs at the world’s largest 2,500 companies, about 30
percent came from outside the companies that hired
them. This is a significant increase (45 percent) over the
level of the previous three years, for which an average of
20 percent were outsiders. Interestingly, the entire in-
crease is attributable to companies where the transition
to a new CEO was planned, not forced (see Exhibit 1,
page 3). This trend toward outsiders seems a bit para-
doxical in light of another finding from our study: As in
the past, insider CEOs typically lead their companies to
better financial returns than do outsiders.
Just because a larger portion of 2012’s class of
CEOs come from outside the company, however, does
not mean that they bring a different regional perspec-
tive. Fully 81 percent of incoming chief executives,
IllustrationbyGérardDuBois
PORTRAITOF
THE INCOMING
CLASS
THE NEWEST CEOS have
neitherthediversitynor
theglobalbackgrounds
thatyoumightexpect.
byKenFavaro,
Per-OlaKarlsson,
andGaryL.Neilson
CLASS
featurestrategy&leadership
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4. 3
strategy+businessissue71
both insiders and outsiders, are natives of the country
in which the companies hiring them are headquartered
(see Exhibit 2). As you might expect, that number var-
ies depending on geography. For Chinese companies in
2012, all incoming CEOs came from China. For Japa-
nese companies, they all came from Japan. For western
European companies, just 58 percent of the new CEOs
in 2012 came from the country where their companies
are based. Another 33 percent came from another Euro-
pean country.
A similar geographic insularity is indicated by CEO
work experience. Less than half of incoming CEOs have
ever worked in regions outside where their companies
are headquartered, a proportion that declines to less
than 20 percent in both China and Japan (see Exhibit
3). At companies in the U.S. and Canada, the propor-
tion of new CEOs with global experience was right at
the global average, whereas western Europe had the
highest proportion, at 60 percent. Given the critical im-
portance of taking a global perspective on business in
the 21st century, these numbers seem surprising. One
cause may be the increasing levels of connectedness
through global travel and telecommunications, which
make it possible to be a global CEO without having to
work around the world or live in more than one coun-
try. In addition, at the C-suite level, the common “lan-
guage” of business—the mutual understanding of en-
terprise strategy and management—is always prevalent,
Ken Favaro
ken.favaro@booz.com
is a senior partner with Booz &
Company based in New York.
He leads the firm’s work in en-
terprise strategy and finance.
Per-Ola Karlsson
per-ola.karlsson@booz.com
is a senior partner with Booz
& Company based in Stock-
holm. He serves clients across
Europe and the Middle East on
issues related to organization,
change, and leadership.
Gary L. Neilson
gary.neilson@booz.com
is a senior partner with Booz &
Company based in Chicago.
He focuses on operating
models and organizational
transformation.
Also contributing to this article
were Booz & Company senior
manager Josselyn Simpson
and specialist Jane Kim, and
s+b contributing editor Edward
H. Baker.
Exhibit 1: More Outsiders
Insider
Outsider
Incoming CEOs in
planned successions
2012
70%
30%
2009–11
82%
18%
The proportion of new CEOs
hired from inside dropped in
2012, because of a large increase
of outsider CEOs in planned
successions.
Source: Booz & Company
U.S./
Canada
Western
Europe
Japan Other China Brazil,
Russia, India
Other
MATURE ECONOMIES EMERGING ECONOMIES
Exhibit 2: Nationality and HQ Location
New CEOs around the world are most often citizens of the country
their company headquarters are in—and in Japan and China, they are
all citizens of the country where they work.
Same Country
Different Country, Same World Region
Different Country, Different World Region
Nationality of incoming 2012 CEOs and location of company’s headquarters
100%
2%
100% 85% 89%
4% 4%
84%
9%
7%
58%
33%
9%
74%
24%
11% 7%
Source: Booz & Company
2%
GLOBAL
81%
9%
10%
featurestrategy&leadership
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5. featurestitleofthearticle
4
U.S./
Canada
Western
Europe
Japan Other China Brazil,
Russia, India
Other
MATURE ECONOMIES EMERGING ECONOMIES
Exhibit 3: Global Experience
Only 45 percent of the incoming CEOs in 2012 had experience working in a
region other than that of their company’s headquarters.
Incoming 2012 CEOs have had experience working in a world region
other than where company is headquartered
55%
45%
40%
60%
83%
17%
44%
56%
85%
15%
62%
38%
53%
47%
GLOBAL
45%
55%
YES
NO
Source: Booz & Company
fostering communication even when executives speak
different languages.
The way that companies bring their new CEOs
on board has changed significantly over the years. In
2012, 29 percent of the companies in a planned chief
executive transition followed an apprenticeship model, a
model in which the outgoing CEO remains or becomes
chairman and thus can help “apprentice” the incoming
CEO. Of the companies that chose this model, 85 per-
cent chose an insider as CEO, far higher than the num-
ber that chose outsiders. The data suggests that these
companies are seeking continuity through their chief
executive transition.
The variation among companies from different re-
gions choosing the apprenticeship model is noteworthy.
In Japan, in keeping with the country’s tight-knit ways,
and where 80 percent of turnover events in 2012 were
planned, 69 percent of new CEOs saw their predecessor
stay on as chairman. By comparison, just 15 percent of
new CEOs at companies in Europe were mentored by
the previous CEO.
By the same token, the percentage of companies ap-
pointing their new leader as both chairman and chief
executive stood as high as 48 percent 10 years ago. Since
then, however, the proportion has declined significant-
ly, leveling off at around 12 percent since 2009. As we
have observed in past studies, the willingness to concen-
trate power at the top appears to be more prevalent in
North America. Fully 20 percent of new CEOs at com-
panies in North America were also appointed chairman
in 2012, a significantly higher proportion than in any
other region. In Japan, by contrast, no new CEO also
held the chairmanship.
How Leaders Lead
Despite their widely varying backgrounds, nationalities,
and career paths, virtually all new chief executives we
have spoken to over the years agree on one thing: This
job is different from all other executive posts. The sense
of responsibility increases by an order of magnitude,
and the decisions carry much more weight. Prepara-
tion is key, but not every new CEO is given that luxury.
In any case, whether or not the succession is planned,
the new CEOs must lead—moving quickly to gather
together the best team possible, making clear to all
stakeholders his or her vision for the company’s future,
and serving as a model for how he or she expects every-
one to behave. +
Reprint No. 00184
The willingness to concentrate
power at the top appears to be
more prevalent in North America.
featurestrategy&leadership
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6. © 2013 Booz & Company Inc.
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