HAZARDOUS DUTY

Does it just seem that way, or are chief executive officers in the food manufacturing and distribution industry increasingly exposed to the ultimate downside risk of failure, namely being dismissed?Two startling and highly publicized events concerning chief executives from the vendor side of the industry seem to suggest so: In February, M. Douglas Ivester left the Coca-Cola Co. and, in recent weeks,

Does it just seem that way, or are chief executive officers in the food manufacturing and distribution industry increasingly exposed to the ultimate downside risk of failure, namely being dismissed?

Two startling and highly publicized events concerning chief executives from the vendor side of the industry seem to suggest so: In February, M. Douglas Ivester left the Coca-Cola Co. and, in recent weeks, Durk I. Jager left Procter & Gamble. Both men have some important career aspects in common: Both left under board pressure, by many accounts; both spent roughly 30 years with their companies, and both had short topside tenures; Ivester two years, Jager months less than that.

There's more: Both executives experienced intense challenge. Ivester was a lightning rod for negative publicity from supposed product-contamination incidents in Europe, from a lawsuit that alleged racial discrimination and from his own reluctance to name a number-two executive. Jager endeavored to jolt P&G's corporate culture by careering toward cost-cutting and rapid new-product development. In both instances, company financial results shrank during their watch.

What do these events, and similar ones throughout many industries, suggest about corporate governance and how it's changing now?

Maybe the biggest difference is that boards now run executives; the reverse was the case until recent time. Wall Street has a heavy hand in this change. In the past, institutional investors would simply shift assets elsewhere if a certain company's stock proved lackluster. Now, they are far more prone to leverage power over boards, and demand big change. Some published studies suggest that chief executives -- especially those promoted or brought in to correct a financial slump -- may be given about a year and a half to implement a turnaround scenario; perhaps about a third the time they would have been permitted a generation ago.

Incidentally, looking at the distribution side of the food industry, some topside churn is also evident there, although few extremely short tenures are in evidence. Considering the nation's top 20 distribution companies alone, new top executives have emerged in the past couple of years or so at Ahold USA, Fleming Cos., Delhaize America, Nash Finch Co. and at the supercenter divisions of both Wal-Mart and Kmart. President-level executives turned at more companies, or are expected to soon. This is not to suggest that involuntary departures were at work in every instance, but some of that happened.

It's difficult to tell how this trend toward shorter-lived executives will ultimately play out for business. Probably, though, the answer is that results will vary according to boards' motivation.

Directors of atrophied and underperforming organizations can certainly refresh them with a skillful change at the top. The danger is that a board may be pressed by external factors to make a change before the strategic underpinning for change is developed. In that instance, the mistaken hope that the very act of change is strategy itself could trump future success.