Era of shaky job security for the CEO

Despite an economic recovery and improving stock market, a stark reality faces America's business elite: While the perks of sitting in a corner office are great, job security isn't one of them.

The surprise departure of Boeing's chief executive officer, a sudden shakeup at Delta Airlines, and a top-level tussle at the Walt Disney Co. over the future of CEO Michael Eisner are three current examples. But the trend runs wider, reflecting a heightened corporate focus on ethics and financial performance - and on the duty of directors to keep tabs on both.

The upshot: Although being CEO has never been easy, top executives today live more than ever with angst as well as high pay and "golden parachutes."

• Some 39 percent of all CEO turnover last year was involuntary (a firing or forced resignation), up from 25 percent in 2001, according to the consulting firm Booz Allen Hamilton (BAH). Some experts believe this year's number will be higher.

• Just in the past few business days, 14 US chief executives have departed, says John Challenger of the Chicago outplacement firm Challenger Gray & Christmas.

"The professional life of a large company's chief executive increasingly resembles that of the Hobbesian man: It is nasty, brutish, and short," notes a study by BAH, a major consulting firm, making reference to writings of a 17th century English social philosopher, Thomas Hobbes.

For years, it's been true that poor financial performance will cause a CEO ouster. But some experts see corporate boards increasing their performance-driven vigilance - and taking other matters into account.

Jeffrey Sonnenfeld, associate dean of the Yale School of Management, sees a new pattern where CEOs are turned out not just for overt misconduct or failing to boost the stock price, but also to maintain the firm's credibility.

That's the case, he says, in the recent departure of the New York Stock Exchange chief Richard Grasso, and of Boeing CEO Phil Condit's resignation this week. Disclosure of Mr. Grasso's $188 million pay package meant that a critical constituency, the exchange's members, lost faith in his leadership, and he had to resign.

"Nobody said Grasso did anything illegal," Sonnenfeld says. Nor were the conflict-of-interest charges that felled two other top Boeing executives leveled at Condit. But when "critical constituencies," such as Boeing's key customer - the US government - "lose faith in the leader, the boards are listening," he says.

This week, in the wake of the Boeing scandal, the Pentagon has postponed an unconventional deal with Boeing for air-refueling tankers - a costly deal that had stirred controversy.

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