Bloodbath in the US boardrooms

THE REVOLVING door in corporate America's executive suites is spinning faster than ever and, with the economy heading into negative territory, more high-profile executives are likely to be unceremoniously dumped on the outside.

Ford's Jacques Nasser joins a long list of top officers recently relieved of their duties, including chief executives or chief financial officers at Xerox, Lucent, Honeywell, Enron, Nortel and United Airlines. Top-name sackings stretch into the non-corporate world, too. The Red Cross forced out its controversial director, Bernadine Healy, after criticism of her handling of the 11 September disaster. Wall Street, meanwhile, is buzzing with rumours about who might be next.

Carly Fiorina, at Hewlett-Packard, is odds-on favourite as she is thought to be running out of time to right the wrongs at the huge computer maker. Ditto AT&T and Motorola, where embattled executives are under pressure from disgruntled investors.

Challenger, Gray & Christmas, a placement firm that tracks executive suite departures, says the days when someone like GEC's Jack Welch would head a company for 20 years are gone. The 61 chief executives who departed in September averaged five-and-a-half years in the job.

'The CEO job has become like that of the US President,' said John Challenger. 'You get one term and, if you are very lucky, you get two. The board of directors is no longer a group of allies handpicked by the CEO but independent, like Congress. There is more oversight, more interference and much more questioning of what the CEO is doing.'

In weak economic cycles, boardroom second-guessing becomes more acute. At this time last year, when the economy first slowed - dropping from 5.6% to 2.7% - the number of executive departures doubled from the year-earlier period. In October of last year, 130 executives left their jobs. During the summer, as the economy levelled off, so did the pace of lay-offs. Now that the economy has softened anew, dipping into negative territory, corporate heads are rolling again.

Executives used to be fired rarely, and then only for notable underperformance or incompetence. Today, boards are much more likely to switch to a new team leader if the company is struggling. One recent Harvard study showed that, in the 1990s, chief executives were three times as likely to be fired as they were in the 1980s, because there was less tolerance of mediocrity.

Not everyone thinks the quick release of struggling chief execs is good for corporate America. John Challenger questions if today's boards give their executives time to make mistakes and learn how to adjust to tough periods that 'test their mettle'. Wall Street, however, generally welcomes change.

'When a major corporation gets rid of a chief executive, by and large it isn't out of the blue,' said Prudential Securities' Larry Wachtel. 'The executive usually lost Wall Street's confidence long before the sacking took place.'

Most chief executives are well aware their stay could be short, and negotiate severance contracts accordingly. Challenger said a rising number of executives - flush with severance cash - opt for semi-retirement, to play golf or sit on corporate boards, unlike the hundreds of thousands of regular workers let go in the downturn who end up on the dole, or scrambling for a new job.