Good morning. Big companies announcing new CEOs lately are mostly choosing insiders. Think of Walmart’s John Furner, Target’s Michael Fiddelke, and Geico’s Nancy Pierce. But 2025 has actually been a big year for outsider CEOs. With AI roaring ahead plus unprecedented tariffs, historic geopolitics, and rampaging activist investors, boards of directors naturally want someone who can change a company’s direction, and often an outsider, untethered to the company’s past, seems like the right choice. Through September, 33% of the new CEOs in the S&P 500 this year were outsiders, a striking increase from 18% last year, according to the Conference Board and its data partner ESGAUGE. Insider CEOs often seem like the obvious choice, but Jim Citrin, who leads the CEO practice and co-leads the board practice at the Spencer Stuart advisory firm, tells me that research supports boards taking a chance on an outsider—in this or any other business climate.
When it’s time to replace the CEO, boards tend to choose insiders, on the assumption that they outperform outsiders. “That’s an absolute belief,” Citrin says, based on 25 years of counselling boards on successions. But “it’s not true. The data shows that insiders and outsiders perform virtually the same on an average basis of total shareholder return relative to the market.” Spencer Stuart research of 950 CEOs at S&P 500 companies shows that 34% of insiders are classified as overperformers while 33% of outsiders are. The difference is the volatility of performance. With outsiders “there’s more upside, but there’s more downside,” Citrin says, meaning the good performers tend to be really good and the poor performers tend to be really poor.
One of directors’ most strongly held views is that insider CEOs bring more stability. It seems so obvious. Citrin says the data isn’t in yet, but he’s skeptical. An insider CEO will typically have been one of two or three candidates, and those who didn’t get the job typically leave, he says. Plus, an insider knows where the bodies are buried and wants to build their own team. So it could be that, on average, insiders “make more change in the C-suite than someone coming in from the outside.”
