March 13, 2005

THANKS, KEN:

Boards Call the Shots, Spurring CEO Exits (Anupama Chandrasekaran, 3/13/05, Reuters)

Corporate boards are shedding their sleepy images and becoming more ruthless when something is not quite right at the top.

The result: Top U.S. executives are being knocked off their pedestals faster than ever.

Boards are asking high-level company officers to hit the road for anything ranging from a financial scandal, lackluster results, improper insider trades or even an affair with another executive.

In February, U.S. companies announced 103 CEO changes compared with 92 in January, according to Challenger, Gray & Christmas, an outplacement and employment research firm. It was the fourth consecutive increase in monthly turnover and the first time in four years that more than 100 CEO changes were announced.

"A few years ago, most boards only rubber stamped the decision of the executive team. But today they are flexing their muscles and digging into every area of the company," said John Challenger, the firm's chief executive. "They are scrutinizing the results and second-guessing every decision the CEO makes."


This is one of the excellent outcomes of the Enron Era. Now it's time for them to start cutting executive pay down to reasonable levels.

Posted by Orrin Judd at March 13, 2005 4:13 PM
Comments

Mr. Judd;

That seems unlikely. It's quite rare to increase the demands of a job while simultaneously cutting the pay rate. Presumably increased turnover and demand will decrease supply as well.

Posted by: Annoying Old Guy at March 13, 2005 4:19 PM

Demands of the job? That they not be sleazy?

Posted by: oj at March 13, 2005 4:27 PM

Disappointing that you worked neither Clapton nor Dylan into the tag-line.

Posted by: ghostcat at March 13, 2005 6:38 PM

Board members individually are starting to be on the hook for lousy oversight in terms of both SEC and shareholder litigation.

Since the Boards are made up of officers of other major corporations, and those who consult for them, it is highly unlikely that the log-rolling which led to NBA-like compensation for even the most middling CEO will continue.

Posted by: Bart at March 13, 2005 8:42 PM

Mr. Judd;

Yes.

Bart;

So you're betting on increased supply? Possible but IMHO doubtful.

Posted by: Annoying Old Guy at March 13, 2005 8:59 PM

AOG,

Mistated things. What I meant to say is that there is no incentive for the log-rolling to end, so CEO pay will continue to skyrocket.

Posted by: Bart at March 14, 2005 10:43 AM
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