Boards are worried about retention of star managers, and if the managers believe they have no chance at the top job, they may leave a company more quickly. On the other hand, given Wall Street's current tendency to punish underperformance rapidly and severely, company performance is essential. Boards will continue to scan both internally and externally for the kind of talent that can drive a company to success. The number of CEOs who serve in office 20 or more years is about equal to 1980 baseline figures and hovers at about 5 percent. It's difficult for any CEO to serve successfully for a long time.
Companies face market conditions that require new skills.
Boards get impatient with a CEO's performance. Reaching five times the median tenure in office may be the result of unusual circumstances more than gifted leadership. Among the mix are several founders who have grown with their companies. The number declines to 28.5 percent among the remaining Fortune 700 companies. While Harvard was the most frequent source of MBAs, CEOs with Harvard MBAs comprised little more than 8 percent of all CEOs in the Fortune 700.