Top execs in Sweden are being replaced at record pace

STOCKHOLM: After a nervous pause following the financial crisis, Sweden’s biggest companies are replacing top executives at a record pace.

So far this year, 27% of the 30 companies on Stockholm’s OMXS30 index have changed chief executive officers or announced that their lead manager will step down. It’s the culmination of three years of rapid change at the very top of Sweden’s blue-chip corporations.

“One explanation is that a few years have now passed since the global financial crisis,” Claes Hemberg, an analyst at Avanza, said by phone. “During 2009, 2010 and 2011, no one dared to fire any CEO, but instead had to focus on keeping what one had and ride it out. Now that a few years have passed, companies can make the changes they may have wanted to do.”

Miner Boliden AB and builder Skanska AB are the latest examples of firms now injecting new blood at the very top. Since early 2015, some 73% of the largest companies have changed their top executive or said they will. That’s an annual average of more than six, compared with fewer than three a year in the seven years from 2008 to 2014.

Investors don’t seem to mind the changes, with the OMXS30 index having gained 14% in the past 12 months and 14% since early 2015.

Companies that got new CEOs last year include Alfa Laval AB, Electrolux AB, Getinge AB, Svenska Handelsbanken AB and Swedbank AB, while Ericsson AB got a new chief executive in January this year when Borje Ekholm took the helm. At SEB AB, Johan Torgeby became CEO in March while at Atlas Copco AB, Mats Rahmstrom took over as CEO in April.

The flurry of changes isn’t confined to the largest companies: Hoist Finance AB, BillerudKorsnas AB and Studsvik AB are the latest examples of smaller firms making changes at the top, all announcing new CEO appointments on Oct 30.

While most departures are amicable, there are also CEOs who are forced out, such as Handelsbanken’s Frank Vang-Jensen, who was abruptly replaced by Anders Bouvin in August last year. Getinge fired CEO Alex Myers the same month. Over at Ericsson, Hans Vestberg was let go in 2016. Among midcaps, builder NCC AB ousted its CEO on Oct 30.

Boards may these days also be more sensitive to insider deals, corruption and transparency issues, according to Hemberg. Swedbank AB CEO Michael Wolf was fired in early 2016 amid allegations of insider trading, of which he was later cleared. Telia AB CEO Lars Nyberg resigned in 2013 after prosecutors started a probe into alleged bribery in Uzbekistan.

Old age and illness obviously also play a role in executive turnover rates. But Hemberg said the faster pace of change may be a sign that boards want to turn to managers well versed in digitisation.

“I think that’s a step that perhaps the old guard doesn’t quite understand, so it’s somewhat of a generation shift,” Hemberg said. “You can’t direct a company today without also being able to lead that transformation.” — Bloomberg