Of the 168 chief executives appointed to S&P 1500 companies in 2025, 84% were first-time CEOs, according to Spencer Stuart's annual CEO transitions report. Boards chose untested leaders at the same moment they faced economic uncertainty, geopolitical instability and AI disruption. Then, by their own admission, few of them did a strong job preparing those leaders.
A board that appoints a first-time CEO and then governs as though it hired a veteran has made half a decision, and the underperformance that follows belongs on the board's ledger as much as the CEO's. Choosing a first-timer is a commitment to do development work. Most boards have signed the commitment without reading it.
The admission comes from a Korn Ferry piece published on October 5, 2026, which draws on early results from a forthcoming survey on CEO and board risk. Only 15% of first-time CEOs said their board did a strong job preparing them to lead, and directors rated their own effort about as poorly. Elise Schroeter, who runs Korn Ferry's CEO and C-Suite Impact Accelerator, puts it bluntly: many boards assume coaching or informal guidance from the chair will do, but "in reality, first-time CEOs need a much more structured transition program that addresses both strategic and operational leadership challenges."
Boards changed who they hire and kept the old way of governing
The traditional board playbook made sense for its era. In crises and transformations, directors appointed someone who had run a company before, then stepped back. Hands-off governance worked because the person in the chair already knew what the job demanded. That playbook is still in use; the candidate it was designed for mostly is not.
Korn Ferry attributes the 84% figure to the S&P 500, but Spencer Stuart's report, the primary source, places those 168 appointments across the S&P 1500; only 59 S&P 500 companies named a new chief executive. The broader point survives the fix. Spencer Stuart also found that most first-timers were promoted COOs or divisional heads, and that two-thirds had never served on a board. Having never sat on the other side of the table, they are learning what a board expects while the board is deciding whether they meet it.
What makes the Korn Ferry data unusual is the agreement. Performance reviews rarely produce consensus between the person assessed and the people assessing. Here both sides concede the preparation fell short (each lands closer to 50% when asked whether the board did a "pretty good" job). When the evaluators grade themselves that low, the problem sits in the process rather than in any individual CEO.
Learning on the job only works if someone is teaching
The strongest case against our position goes like this. The CEO role cannot be taught in a classroom; it is learned by carrying the weight. A board that hovers over a new chief executive breeds dependence, blurs accountability and signals to the senior team that the real decisions happen elsewhere. The board's job is to hire well and replace the CEO if needed, and history suggests that approach works: when the stakes were highest, boards called in experienced hands and let them run.
That argument is right about hovering and wrong about everything else. The hire-and-step-back model depended on a pool of seasoned CEOs to draw from, and boards have chosen to stop drawing from it. Learning on the job without structured feedback is trial and error funded by shareholders, and the board is the only body positioned to shorten the error part. Tierney Remick, co-leader of Korn Ferry's Board and CEO services, frames the job well: with first-time CEOs, "there's a balance boards need to strike between supporting and judging." A board that only judges a first-time CEO has abandoned half of its job and kept the easier half.
Nor can boards recruit their way out. If inexperience is the risk, the instinct is to look outside for someone more polished. A 2024 study in Managerial Finance found that external CEO hires earned higher total compensation but did not outperform insiders on return on assets or Tobin's Q. The study does not isolate first-timers, so it is no verdict on them. It does suggest that changing where the candidate comes from, and paying more for the privilege, is no substitute for what happens after the appointment.
A board that only judges a first-time CEO has abandoned half of its job and kept the easier half.
Discount the stock gap, but don't dismiss the problem
Korn Ferry's headline number is striking: a 2026 study by the firm found that companies hiring a first-time CEO averaged annual stock returns of 16.3%, against 36.3% for those that chose an experienced one. That figure deserves a discount. It comes from a firm that sells transition programs and rests on that firm's study alone, and a raw comparison of returns says little about cause. First-timers may simply be appointed in different circumstances than veterans.
The case for better board support does not need that number. It rests on the 15% figure and the directors' own concession. The remedy has its own evidence gap, too: we found no credible public evidence that boards running structured transition programs have closed the performance gap. Boards adopting them are acting on a reasonable hypothesis, which still beats acting on none.
In practice, the transition plan should be approved in the same board session as the appointment, with the same seriousness as the compensation package. Schroeter says many boards don't adequately help first-time CEOs, insiders included, understand the cultural assets and liabilities they inherit, and that first-timers should spend time with directors, senior management and other stakeholders before they take over. Claudia Pici Morris, who leads Korn Ferry's CEO and board succession work in North America, adds that boards should define success for the first 12 months beyond financial results, with qualitative measures tied to strategy. "Boards need to set clear expectations at the point of transition about what 'good' looks like in the first year," she says. None of that is hovering; it is work only the board can do.
Appointing a first-time CEO is a defensible bet, and often a good one: insiders know the business, and a younger leader may stay long enough to see a strategy through. But the bet has terms. A board that wants the upside of an untested leader while keeping the governance habits it built for veterans is betting against its own process, and the directors have already told us how well they think they have prepared their new CEOs.
