CVS Health Appoints David Joyner as CEO Amid Growing Trend of Veteran Executive Leadership

As economic uncertainty drives investor concerns, companies increasingly turn to seasoned leaders for stability

In a move reflecting broader corporate trends, CVS Health has appointed longtime executive David Joyner as its new CEO, marking a strategic shift as the company faces rising investor pressures. Joyner, a veteran of CVS, steps into the leadership role during a challenging time, replacing Karen Lynch, who led the company for three and a half years. Under Lynch’s tenure, CVS’s stock fell nearly 11%, and the company was compelled to revise its 2024 profit forecasts downward three times, citing rising Medicare-related costs.

CVS is not alone in turning to experienced leaders to weather the economic turbulence. Nike recently appointed former executive Elliott Hill as its new president and CEO, replacing John Donahoe, in an effort to rejuvenate sales and strengthen the company’s market position. Similarly, aerospace giant Boeing brought in industry veteran Kelly Ortberg to navigate regulatory and legal challenges.

Brian Jacobsen, chief economist at Annex Wealth Management, highlighted that investors often find reassurance in the familiarity and expertise of veteran executives during times of uncertainty. “In periods of economic instability, seasoned leaders who have navigated previous downturns can bring a sense of stability,” Jacobsen said.

The move to replace leadership comes amid a broader wave of CEO departures. According to a report by Challenger, Gray & Christmas, CEO exits in the U.S. reached a record high in 2023, with a 15% increase in departures between January and August, totaling 1,450. Economic uncertainty was a primary factor in this leadership shake-up.

Walt Disney is among the latest companies to follow suit, announcing this week that James Gorman, a veteran from Morgan Stanley, will step in as the new chair. Gorman had already been tasked with finding a successor for Bob Iger, Disney’s long-time CEO who returned after initially retiring in 2021 to guide the company through pandemic-related challenges.

Michael Ashley Schulman, chief investment officer at Running Point Capital, observed that many companies now prioritize experience and stability over innovation as they navigate difficult economic waters. “Companies are bringing in seasoned leaders to execute turnaround strategies, rather than taking on long-term transformation,” Schulman noted.

While bringing back veteran executives can offer short-term relief, the approach has delivered mixed results. For example, Steve Jobs famously returned to Apple in 1997, revolutionizing the company with the iPhone. Howard Schultz also returned to Starbucks multiple times, successfully steering the coffee chain through slumps in sales. However, this strategy has not worked as well for others, including Procter & Gamble (P&G). P&G’s decision to bring back former CEO Alan Lafley in 2013 fell short of expectations, and he was replaced after just two years.

Research from the MIT Sloan Management Review in 2020 found that companies led by “boomerang CEOs”—executives returning for a second tenure—tend to underperform compared to their first term. On average, stock performance under these leaders was 10% lower than during their initial leadership stint. Xu Jiang, an associate professor at Duke University’s Fuqua School of Business, suggests that returning CEOs may exhibit overconfidence, relying on outdated strategies and struggling to adapt to new market conditions.

As CVS and other companies continue to look to seasoned executives for stability, the effectiveness of these leadership changes remains to be seen. While experience may provide a steady hand in turbulent times, the challenges of evolving business landscapes require a delicate balance between the old and the new.