Companies are cycling through CEOs—and replacing them with first-timers

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In a year marked by market volatility, inflation, activist pressure, and economic uncertainty, boards leaned heavily toward first-time chief executives. That is the central finding of Spencer Stuart’s 2025 CEO Transitions Report, which tracks leadership changes across the S&P 1500.

Some 168 new CEOs were appointed in 2025, the highest total since 2010. The defining shift was who got the job. Among incoming CEOs, 84% were serving in their first enterprise CEO role, reversing a multi-year tilt toward leaders with prior public-company experience.

As recently as 2024, more than one in five new CEOs had already led a public company. That share fell sharply in 2025. Of the 140 first-time CEOs appointed, 116 had no prior enterprise CEO experience. Two-thirds had never served on a public company board, meaning many are stepping into the role without prior exposure to shareholder oversight or public company governance.

The report suggests experienced CEOs can be especially valuable in turnarounds or crises. Over time, however, talented first-time CEOs are often more likely to deliver stronger performance. That conclusion is likely to resonate in boardrooms weighing whether to prioritize a steady hand or long-term upside in their next succession decision.

Industrial and financial services companies were particularly likely to elevate rookies, with 90% of incoming CEOs in those sectors stepping into the top job for the first time. Healthcare and technology companies were somewhat more likely to choose leaders with prior public-company CEO experience.

The pivot comes amid elevated turnover. Average CEO tenure has declined to 8.5 years in 2025, down from 9.1 years in 2021. Nearly 40% of S&P 1500 CEOs are leaving within their first five years.

Spencer Stuart’s CEO life cycle research shows why that early stretch matters. CEO performance paths often split in years three through five. Investors tend to allow a reset in the first year or two, but by year three, expectations shift firmly to execution and results.

With tenure compressing and scrutiny intensifying, boards may be less willing to wait for a turnaround that fails to materialize. For the large class of first-time CEOs appointed in 2025, that window will be a key test.

The share of externally hired CEOs slipped to 40% in 2025 from 43% in 2024. Large-cap companies remain the most committed to internal succession, with just over one-quarter hiring outsiders. Smaller companies are more likely to recruit externally, though internal promotions still account for the majority of appointments overall.

This internal focus also helps explain a demographic shift. Incoming CEOs were younger on average in 2025 at 54.4 years old, down from 55.8 the year before. The share of new CEOs aged 60 and above fell to 18% after hovering near 30% in recent years.

There is a clear tension in that strategy. CEO tenure is shrinking, and scrutiny is rising, yet boards are moving away from proven public-company veterans and toward internally developed leaders, many of whom lack prior board experience. The bet appears to be that deep operational knowledge and familiarity with the company outweigh a résumé line. Whether that calculation holds will become clearer as the class of 2025 moves through its first five years.

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