When the CEO won't go.

• Author: Edelson, Harry

The biggest problem facing a board is a CEO who will protect his position at all costs.

Cats may have nine lives, but the term of some CEOs may outlast all but the hardiest cats. A company's announcement of a new CEO may be relatively uneventful, a natural transition - except when the announcement is a surprise. Then it is headline news.

Blockbuster stories about dismissed CEOs walking away with huge severance packages are commonplace these days. The basis for these outlandish going-away presents at the expense of powerless shareowners is both simple and sinister. Simply put, the CEO won't go.

Sadly, severance packages are often the only way to rid companies of CEOs. The problem is that severance packages are too generous, which is not surprising since they are crafted by the lawyers of the CEO during the recruitment process. CEOs are rewarded handsomely when they won't go, so what incentive do they have to go quietly and submissively?

(But, one may counter-argue, what is worse: retaining an ineffective CEO or paying him to leave? When the board fails to oust a poorly performing CEO, there are no headlines and the insidious damage to a company continues unabated. That, however, is an argument for another day.)

I am not a psychologist, but I have been on enough boards to recognize the biggest problem facing a board of directors - the problem caused by the CEO who will protect his position at all costs, even the death of his company. Yes, I said "his" company because in his eyes it is not the shareowners' company or the employees' company or the board of directors' company. It is as if the title of CEO bestowed upon him the eternal right to rule the company.

The narcissistic CEO may admit to mistakes, but only he knows how to correct them. He may fire his top executives without a second thought, but will resist his own firing with all the resources at his command, including the private use of company counsel and funds. The company may have performed poorly, but it is not his fault. It is the fault of his executive team even though he recruited them. Or, the poor performance was due to circumstances beyond his control. How can he control competitors who release new and better products, or federal regulators who change the ground rules, or the economy which changes direction?

Yes, the CEO may even think the problems of the company can be traced to the actions of the board of directors. It may have turned down his request for a merger, refused...