- After around 27 years in the position
- Accolades, praise and thanks for Kilroy
- Search for a successor
- Kilroy spoke at length and said 160 words
(exechange) — Los Angeles, California, March 30, 2023 — John Kilroy, chief executive of Kilroy Realty, is set to leave his position. As announced by Kilroy Realty Corp. in a news release and in a regulatory filing published on Thursday, March 30, 2023, John B. Kilroy leaves his post as chief executive officer at the real estate investment trust, after around 27 years in the role, effective December 31, 2023.
It is the end of an era.
The average tenure of CEOs who announced their departure over the past 12 months was 7.9 years. Around 8% of departing CEOs left their posts after more than 20 years. This is according to data collected by CEO-exit research firm exechange.
exechange tracks CEO departures at the 3,000 largest publicly traded companies in the U.S., examines the reasons CEOs leave and determines the Push‑out Score™, a measure of pressure on departing chief executives on a scale of 0 to 10.
Kilroy Realty will undertake a search for a successor.
Long goodbye
It is a long goodbye. The announcement of John Kilroy’s move comes up to nine months prior to his planned departure from the post of CEO.
In general, a top executive who announces the departure particularly early may be considered a lame duck.
Lengthy lead times give boards extra time to find replacements, and they also create uncertainty. Would-be successors may jockey for attention and workers may wonder who is actually in charge.
Generally speaking, lame-duck leaders can take a forceful role in selecting a successor and are not expected to launch major shifts.
“Now is the right time”
John Kilroy’s planned departure from the CEO post is explained as follows. John B. Kilroy stated: “I am confident that Kilroy is positioned for future success and that now is the right time to begin a transition to new leadership.”
The top three reasons cited in corporate announcements for CEO departures over the past 12 months are performance issues (27.6% of cases), implementation of a planned succession (16.6%) and the statement that the time was right for a change (10%), according to exechange data. Other motives given for leadership changes included the outgoing CEO’s wish to pursue other opportunities (6% of cases), personal reasons (3.8%) and conduct issues (2.2%). Rather rarely stated reasons are health problems (1.6% of cases), disagreement (1.3%), death (1.3%), the desire for more time with family (0.9%) and career change (0.6%). Sometimes, more than one reason was given. In 28.2% of cases, no reason was given.
Precise information regarding John Kilroy’s future plans was not immediately available.
“Retirement”
Kilroy Realty said: “John B. Kilroy, Jr., Chief Executive Officer and Chairman of the Board of Directors of Kilroy Realty Corporation (NYSE: KRC, “Kilroy” or the “Company”), today announced his retirement as Chief Executive Officer effective as of the end of the year.”
Generally, retirements are seen as formally voluntary departures. Still, CEOs may also be pressured to accelerate their retirement plans. In fact, 34% of the time “retire” was used in CEO departure announcements over the past 12 months, the departing chief executives received Push-out Scores above the critical threshold of 5, indicating elevated pressure.
Share price decline since March 2018
The announcement follows a decline in Kilroy Realty Corp.’s share price of 54% since March 2018.
In the position of CEO since 1996
John Kilroy became CEO of the Company in 1996.
John Kilroy was elected to serve as the Company’s Chairman of the Board (“Chairman”) in February 2013 and has been the Company’s CEO and a director since the Company’s incorporation in September 1996.
Kilroy also served as the Company’s President from the Company’s incorporation in September 1996 until December 2020.
Having led its private predecessor, Kilroy Industries, in a similar capacity, he became its President in 1981 and was elected CEO in 1991.
Kilroy has actively led the Company to become one of the premier landlords on the West Coast and in Texas.
He is involved in all aspects of the Company’s real estate acquisition, entitlement, development, construction, leasing, operations, financing, and dispositions.
With his expertise and guidance, the Company successfully entered new markets at the right point in the cycle, including San Francisco, Seattle and more recently Austin, Texas.
Through his leadership, the Company has become a world leader in sustainable real estate, having consistently won numerous awards. It achieved carbon-neutral operations in 2020.
Kilroy currently serves on the Policy Advisory Board for the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley and the Advisory Board of Governors of the National Association of Real Estate Investment Trusts.
He also is a member of The Real Estate Roundtable. Kilroy previously served on the board of directors of MGM Resorts International (NYSE: MGM).
He is a past trustee of the El Segundo Employers Association, Viewpoint School, Jefferson Center for Character Education and the National Fitness Foundation.
He was also a member of the San Francisco America’s Cup Organizing Committee.
Kilroy attended the University of Southern California.
160 words by John Kilroy
In the news release announcing his departure as CEO of Kilroy Realty Corp., John Kilroy received accolades, praise and thanks.
In announcing the leadership change, John Kilroy spoke at length and said 160 words.
“Historically turbulent market”
John Kilroy stated: “After almost 30 years as CEO of Kilroy and 50 years in this business, I have decided to retire at the end of this year. We have assembled the greatest team in the business at Kilroy, and together we have built a unique portfolio of premium, state-of-the-art work environments spanning some of the country’s strongest markets – in Austin, Texas and on the West Coast, from Seattle to San Diego. I am confident that Kilroy is positioned for future success and that now is the right time to begin a transition to new leadership. As a member of the Succession Planning Committee, I will work with the Board on the search for my successor, and we will remain committed to our strategy, focusing on our three core tenets – best-in-class real estate, disciplined capital allocation and a fortress balance sheet – to deliver value for our stockholders. I am confident that our outstanding team will continue to thrive in this historically turbulent market.”
Over the past 12 months, 25% of all outgoing CEOs remained silent in the departure announcement, according to data compiled by exechange. Departing CEOs who did make a statement said an average of 109 words. The longest statement was 510 words. The shortest statement was 23 words. Leadership transitions in which departing CEOs provide conspicuously short, excessively long or no explanations for their move are statistically associated with elevated pressure and show an increased incidence of Push-out Scores above the critical threshold of 5.
39% of CEOs are forced out or fired
When CEO departures are announced, exechange determines the Push-out Score on a scale of 0 to 10 to assess how likely it is that the chief executive was pushed out or felt pressure to leave the position, with 0 being most likely a voluntary move and 10 being most likely a forced exit. Anything over a 5 indicates that there are valid reasons to believe an executive may have been pushed out.
Of the 319 CEO departures in the Russell 3000 Index evaluated over the past 12 months (March 30, 2022, to March 29, 2023), the average Push-out Score was 6.1, according to exechange data. References to conduct issues, disagreements and irregularities lead to the highest Push-out Scores. When performance issues, time with family or personal reasons were cited as departure reasons, the average Push-out Scores were also significantly elevated.
Around 39% of the CEO departure events from the past 12 months received Push-out Scores of 8 or higher.
In other words, in the past 12 months, three in eight departing CEOs were forced out or fired.
Push-out Score for John Kilroy’s move determined
The Push-out Score regarding John Kilroy’s move is explained point by point in the exechange report.
Read the full story in the exechange report 14.2023 ($).