Giving the boot
Boards with new backbone are dumping imperial CEOs
The same goes for Fiorina. HP shares are down 30 percent since she took over in July 1999, and the $19 billion merger with Compaq Computer that she engineered in 2002 hasn't yielded the proverbial "synergy" she promised. Last month, HP directors asked for and got her resignation. "Carly's the greatest saleswoman on Earth, but she failed to execute," says Minow.
Not so with Franklin Raines of Fannie Mae. Revenue and earnings were up the past few years at the home mortgage giant, but regulators say accounting sleight of hand was used to smooth earnings to trigger executive bonuses. Raines, who had come under repeated criticism from lawmakers in Washington, was pushed aside in December after the company announced that it would restate earnings for the past four years.
Fannie Mae clearly has major problems with regulators. But in this cautionary new era, even a hint of impropriety can mean curtains for an executive, where once a slap on the wrist and a bit of clever public relations might have sufficed. Boeing's Stonecipher was pushed out although his acknowledged affair was consensual. The fact that he violated the very ethics code of conduct he required all of the company's employees to sign only underscored his precarious position. "Right now, there's no forgiveness and no burying mistakes," says Challenger.
And though boards are moving aggressively in some instances to force out CEO s, they still tend to be pragmatic when it comes to finding a successor. Last year, 66 percent of all CEO successors at Fortune 1,000 companies were insiders, much like Robert Iger, who has been selected to succeed his longtime boss at Disney. That's up from 2002, when 61 percent of newly named CEO s emerged from inside the firm.
That said, the question is, Which CEO is next? Among those on the short list of Wall Street insiders are people like Raymond Gilmartin of Merck, who is now contending with a painful recall of pain reliever Vioxx, as well as the class action lawsuits and falling profits that it has spawned.
Predicting the next CEO to fall is an uncertain science at best. What's certain is that there will be a next one, and more after that.
FIORINA
A great saleswoman, she drove the controversial merger of HP and Compaq but never delivered on the expected synergy. Meanwhile, Dell ate HP's lunch in PCs.
STONECIPHER
Brought back to clean up after an Air Force scandal, he instituted a companywide ethics code. His own ethics came into question after he admitted an affair with a colleague.
IDEI
The Japanese head of Sony lost his job to a westerner after the company fell behind Microsoft and Apple in the rapidly changing music and video game business.
GREENBERG
He personified insurance giant AIG with four decades at the helm, but a growing investigation of the insurance industry by New York Attorney General Eliot Spitzer did him in.
RAINES
The former White House budget director found political connections couldn't save him when the mortgage company was forced to restate billions of dollars in past earnings.
EISNER
After a strong start, the longtime head of the Magic Kingdom lost his mouse ears when shareholders and Disney heirs seized on a series of business blunders and PR fiascoes.
With Betsy Streisand
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