What the WEF Just Happened? The Sudden Exit of its Founder and CEO and the Crisis at Davos
Klaus Schwab’s Abrupt Departure from the World Economic Forum: End of an Era at the Elite Global Gathering
By Karan Bir Singh Sidhu
With nearly four decades of experience as an IAS officer, the author writes on global economic governance, institutional leadership, and geo-strategic affairs.
A Tectonic Leadership Shift at Davos
The sudden exit of the long-serving CEO of the World Economic Forum (WEF) last month, 87-year-old Klaus Schwab, marks a tectonic leadership shift for an organisation that has shaped elite global discourse for over half a century. Schwab had originally planned to step down in 2027—strategically timed to coincide with the end of Christine Lagarde’s term as President of the European Central Bank, who was widely viewed as his most likely successor. However, that carefully choreographed transition was upended by his abrupt departure amid allegations of financial misconduct and a reported clash with the Forum’s directors.
The fallout has cast a long and uncertain shadow over the WEF, raising urgent questions about leadership succession, institutional governance, and the forum’s continuing relevance in an increasingly fractured global landscape. Held annually in the picturesque Swiss town of Davos—typically during the first week of January—the gathering has often been criticised as little more than an extended Christmas break for the rich and the famous, cloaked in the language of global problem-solving. Schwab’s departure may well signal more than a change in leadership; it could be the beginning of a fundamental reevaluation of the role of the institution itself.
The Rise of Klaus Schwab and the Birth of the World Economic Forum
Klaus Martin Schwab was born on 30 March 1938 in Ravensburg, Germany. With an illustrious academic record, including a doctorate in engineering from the Swiss Federal Institute of Technology, a doctorate in economics from the University of Fribourg, and a Master in Public Administration from Harvard University, Schwab laid the intellectual foundation for what would become a global institution.
In 1971, he founded the European Management Forum while still active in business, notably as part of the management board of Swiss engineering firm Sulzer, Escher, Wyss AG. Initially intended to introduce European firms to American management methods, the Forum soon evolved. By 1974, political leaders joined the dialogue, and in 1979, the Global Competitiveness Report was introduced. These milestones culminated in the Forum being renamed the World Economic Forum, reflecting its expanded ambition.
The Man Behind the Forum
Schwab’s vision was anchored in the principle of “stakeholder capitalism,” where corporations are encouraged to create long-term value not just for shareholders but for society as a whole. Over 54 years, he embodied this ideology, crafting the WEF into a sprawling platform for dialogue, collaboration, and influence.
With his wife Hilde, he co-founded the Schwab Foundation for Social Entrepreneurship in 1998, followed by the Forum of Young Global Leaders in 2004 and the Global Shapers Community in 2011. These initiatives brought younger and more diverse voices into the fold of global leadership.
Yet his leadership style invited criticism. Reports, especially a 2024 Wall Street Journal investigation, revealed how WEF’s structure granted him excessive control, including the power to appoint his own successor—raising red flags about governance in an organisation purportedly committed to transparency.
Evolution into the “Millionaires Club”: The Davos Phenomenon
What began as a modest management forum has grown into a global spectacle dubbed the “millionaires club.” The WEF’s flagship Davos meeting hosts nearly 3,000 high-profile participants annually, from CEOs and politicians to celebrities and academics.
As author Nassim Nicholas Taleb acerbically observed, the event is less about solving the world’s crises and more about elites networking with other elites. The exclusivity has, paradoxically, become both its greatest asset and most persistent critique. Invitations are prized for the prestige they confer, despite the widening chasm between the event’s lofty ideals and the everyday realities it purports to address.
Structural Framework: Not-for-Profit with For-Profit Prices
WEF operates as a not-for-profit foundation headquartered in Geneva. Its mission is to “improve the state of the world” by convening leaders across sectors. However, participation is far from cost-free. Funding comes primarily from 1,000 member multinational corporations, with annual fees ranging from CHF60,000 to CHF600,000.
For many attendees, the total cost—including the Davos entrance fee—can exceed $70,000. These fees form a considerable revenue base, with contributions from the top 100 multinational partners alone topping CHF240 million annually.
What Do Participants Get from Attending?
Despite the high costs, attendance at Davos continues to hold allure for several reasons:
a.) Networking Opportunities
The event offers unmatched access to influential figures across sectors, creating fertile ground for networking and informal deal-making.
b.) Influence and Visibility
Being seen at Davos serves as a status symbol. It projects power, sophistication, and alignment with global trends—intangible yet influential assets in today’s interconnected world.
c.) Access to Ideas
Each meeting explores cutting-edge global issues. In 2025, for example, the forum addressed the theme “Collaboration for the Intelligent Age,” delving into AI, robotics, cybersecurity, and biotech.
d.) Scope for Deals
While hard to quantify, the concentration of decision-makers often results in tangible collaborations and partnerships, even if not immediately apparent.
Nevertheless, academic research has questioned the economic impact of Davos participation, finding no clear correlation with improved financial performance.
India’s Growing Engagement with the WEF
India’s presence at Davos has been increasingly assertive. The 2025 meeting saw its largest-ever delegation, featuring union ministers, three state chief ministers, and nearly 100 industry leaders.
Led by Union Minister Ashwini Vaishnaw, the delegation underscored India’s digital transformation and infrastructure initiatives. Maharashtra’s Chief Minister Devendra Fadnavis sought MoUs across diverse sectors, aiming to bolster the state’s journey towards becoming a trillion-dollar economy.
The Future of WEF: Leadership Crisis and Model Replication
1. The Succession Dilemma
Klaus Schwab’s abrupt departure on 21 April 2025 derailed a carefully planned leadership transition that was set to culminate in 2027. Christine Lagarde—former Managing Director of the IMF and current President of the European Central Bank—had emerged as the leading contender to take the reins, with her term at the ECB conveniently concluding the same year. However, the sudden rupture at the top has cast uncertainty over her anticipated ascension, as the Forum grapples with internal turbulence and questions over its future direction.
In the interim, the WEF board has appointed Vice Chairman Peter Brabeck-Letmathe as acting chairman. A seasoned corporate leader, Brabeck-Letmathe brings decades of experience from major global firms including Nestlé, Credit Suisse, and ExxonMobil, and now finds himself tasked with steering the Forum through this unexpected crisis.
2. The Internal Reckoning
Schwab’s exit came in the wake of a whistleblower letter that triggered a formal investigation into his conduct, bringing to light serious concerns about governance and the alleged misuse of organisational resources. Among the charges are claims that WEF funds were used for personal indulgences, including luxury travel and private services. The Forum’s new leadership now faces the challenge of managing not only these financial allegations but also deeper cultural issues—reports of sexism, intimidation, and a toxic workplace atmosphere that allegedly flourished during Schwab’s reign.
All this unfolds while trying to maintain the confidence—and financial backing—of the global CEOs and corporate members whose contributions account for hundreds of millions of dollars annually. The Schwab family has categorically denied all accusations and has indicated plans to pursue legal action against the whistleblower. The stakes, both reputational and financial, could not be higher.
3. Can the Model Be Replicated?
The WEF has sought to replicate its stakeholder-driven model in targeted initiatives like the Water Initiative in India and South Africa. While India showed promise—prompting other states to explore replication—South Africa's experience revealed challenges, especially when official government backing was lacking.
Replicability hinges on high-level political endorsement, clear stakeholder alignment, and well-defined roles—difficult requirements in fragmented political environments.
The Trump Effect: A Nationalist Disruption at Davos
Donald Trump’s recurring appearances at the World Economic Forum, including his most recent speech after his 2025 re-election, have injected a distinctly nationalist and confrontational tone into what is traditionally a bastion of globalist consensus. His addresses have consistently challenged the foundational principles of the WEF, delivering blunt economic ultimatums, deriding multilateral climate frameworks, and redefining the very narrative of international cooperation espoused at Davos.
While Trump’s messaging on tax cuts, border security, and deregulation resonates with a domestic political base, it often stands in sharp contrast to the WEF’s ethos of stakeholder capitalism and global collaboration. His economic nationalism, presented as a blueprint for American resurgence, has routinely disrupted the self-congratulatory tone of the Davos elite. For many in the WEF audience, his rhetoric signals a growing rift between sovereign-first policymaking and the transnational ambitions of organisations like the Forum—one that the post-Schwab leadership must now learn to navigate in a world increasingly resistant to traditional forms of globalism.
Looking Ahead: Reinvention or Irrelevance in the Post-Schwab Era — and the Trump Factor
The World Economic Forum stands at a decisive crossroads. Klaus Schwab’s departure under a cloud of controversy—marked by allegations of financial impropriety and questions over governance—has coincided with mounting criticism of the Forum’s elitism and waning relevance. This convergence of institutional fatigue and external scrutiny presents a pivotal moment for reflection, reform, and potential reinvention.
Future leadership must now walk a delicate line: retaining the Forum’s appeal to its affluent corporate and political base while also demonstrating a genuine commitment to confronting global inequality, climate change, and systemic dysfunctions. As global political dynamics tilt increasingly towards economic nationalism and public scepticism of transnational elites deepens, the WEF can no longer rely on prestige alone. Its survival and stature will hinge on recalibrating its purpose—and delivering tangible performance.
Complicating the Forum’s future is the resurgence of Donald Trump and the geopolitical spectacle he is creating outside the halls of Davos. Just this past week, Trump sealed a $600 billion investment tie-up with Saudi Arabia in Riyadh, swiftly followed by equally lucrative agreements in Doha with Qatar and in Abu Dhabi with the UAE—all signed in the presence of scores of global CEOs. These high-stakes deals, forged with the speed and showmanship typical of Trump, will not go unnoticed in corporate boardrooms. Many may now be left wondering: is it wiser to ride the momentum of Trump’s transactional “gravy train,” or wait for the WEF to reimagine itself in a post-Schwab world?
The end of the Schwab era may yet prove a defining chapter in the WEF’s legacy. Whether the Forum evolves into a more inclusive and impactful institution—or gradually erodes into obsolescence amid shifting power dynamics—remains an open and pressing question.