Content area
Full Text
They must be visionary leaders, possess great integrity and deliver superior results. Too-tough standards? Not for these top bosses, who make up II's fourth annual ranking.
Click here to see the ranking.
As companies turn down office thermostats to cut costs this winter, chief executives may be wryly wondering why their seats only get hotter.
"It used to be that CEOs of major corporations were expected to produce very steady returns, albeit average ones," notes Charles Lucier, senior vice president emeritus at management consulting firm Booz Allen Hamilton. "These days companies are expected to provide annual returns of 15 to 20 percent -- a much higher standard than just a decade ago."
And CEOs must achieve this lofty goal in an environment marked by intense global competition, breathtaking technological change and, of late, lackluster securities markets. Investors, stung by corporate scandals, demand not only superb short- and long-term performance but also strict integrity and expansive transparency.
The premium on producing superior results quarter to quarter is enormous. "Some CEOs are able to do that and not cannibalize the future, but many are not," says Roselinde Torres, group executive for global practices and marketing at Mercer Delta Consulting, a New York firm that advises CEOs on change and leadership development. As a result, says Booz Allen's Lucier, business has entered the age of "the ephemeral CEO": The rate of chief executive departures in the U.S., once extremely low, is now equivalent to the turnover of employees in general -- about 12 percent annually.
In its annual study of CEO succession, published last spring, Booz Allen said that underperformance is the primary reason CEOs are fired; in 2004 that explained 31.4 percent of all chief executive departures.
Many Wall Streeters recognize that they call the tune in this game of corporate musical chairs.
"I would like to see longer tenure and to see people be less influenced by quarterly earnings," confides one portfolio manager, who concedes that investors often place inordinate demands on management. "But our clients put pressure on us. Everybody wants performance; nobody wants to take responsibility for the pressure."
Others don't buy the "Wall Street made me do it" excuses that some CEOs use to justify ill-advised actions, poor results or sinking stock prices.