CEOs Who Should Lose Their Jobs

The death certificates have been signed. The eulogies have been written. The bagpipes have sounded. That's right, folks. The era of the Imperial CEO is officially over. Thanks to the humiliating collapse of the fraud-riddled likes of Enron, HealthSouth, Tyco, and WorldCom, chief executives today are about as respected as, oh, Internet stock analysts.

And they have about as much job security, too. A CEO no longer has to be photographed on a perp walk, handcuffs scraping cuff links, in order to get the boot; heads are now rolling for the slightest whiff of impropriety. In June, Freddie Mac wiped out much of its C-suite -- its CEO, COO, and CFO -- amid an accounting probe. Another prominent departure of late was American Airlines chief Donald Carty, forced out after neglecting to mention a special bonus pool for top executives while he was asking stewardesses and pilots to take massive pay cuts.

But as the bills come due for the millennium's excesses, many executives are losing their jobs for much less. These days, bosses may actually be shown the door for something as simple as poor performance (imagine that!). Just ask Ford's Jacques Nasser (broomed in 2001); Vivendi's Jean-Marie Messier (2002); EDS's Dick Brown (2003); AOL-Time Warner's Gerald Levin (2002); and -- hello, again, AOL-Time Warner -- Steve Case (2003).

A stunning 78% of the CEOs at the worst-performing 20% of companies in the S&P 500 have been replaced within the past five years. "The way companies are managed is more by the numbers now," says Chuck Lucier, senior vice president emeritus at Booz Allen Hamilton. "If an executive doesn't perform today, he gets shot."

Or Does He?

Fast Company decided to take a look at the other 22% -- the bosses who have somehow managed to hold onto their jobs, new era of accountability be damned. We worked with Bain & Co., The Corporate Library, and Media General Financial Services to screen for companies whose stocks had underperformed both the overall market and their peer groups during the past five years -- through both flush times and rough times -- and whose CEO had been comfortably ensconced in the corner office for at least that long. (We used the five years ending June 30 as our timeline.) We also looked for CEOs whose companies' corporate governance practices were subpar, whose compensation appeared to be excessive, or who investors believed to have made some critical mistakes.

What we discovered is a group of corporate chieftains who have apparently grown roots into the parquet floors of their plush offices. To our eyes -- and to those of fleeing shareholders -- these executives have outstayed their welcome. They are the Teflon CEOs, who seem to emerge smiling and unsullied from the muck of poor results, declining stock prices, strategic blunders and missed opportunities.

Let's start the discussion with Michael Eisner, the onetime wunderkind who saved the Walt Disney Co. in the 1980s and has more recently been trying -- and failing -- to recapture the pixie dust of those glory days. Then there's Christopher Galvin at Motorola, the scion who has led the one-time industry darling into a mire of declining profits and cutthroat competition. We found Robert Waltrip, the 72-year-old CEO of Service Corporation International; he's a funeral-home impresario who got caught up in a death-defying acquisition frenzy. Then there's Patrick Ryan, the CEO of Aon Corp., the insurance behemoth that has seen its margins slide as its competitors' improve. And let's not forget Peter Karmanos Jr., founder and longtime CEO of Compuware Corp., whose beholden board hasn't seemed to notice that revenue has fallen for 12 straight quarters, year over year -- and that the stock price hovers below $6, from a split-adjusted $32 four years ago. These are just the most prominent examples.

Certainly, none of these CEOs has been accused of looting the company or cooking the books. Most of them are trying to fix what they broke, but the truth is that the results have been abysmal. If times have really changed -- and even if they haven't -- why do they still have their jobs? How many strikes will they get before the ump finally calls them out? And is there anything that we might learn about corporate survival from these people?