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The Great CEO Exodus — An impatient Street and Stepped-up Oversight have CEO Turnover in Overdrive. Will business suffer?

BUSINESS WEEK - Nanette Byrnes, with David Kiley in Detroit, Roger O. Crockett in Chicago, and Tom Lowry and Jena McGregor in New York

When the doors slid open at the end of Tom Freston's final ride down the elevator at Viacom Inc.'s Times Square headquarters, it was to a lobby jammed with nearly 2,000 employees. They gave him a teary ovation, shouting "Tom! Tom! Tom!" A heartwarming show of support, all right, but love and admiration from the rank and file didn't prevent the 26-year veteran from getting fired three days earlier. Sumner M. Redstone, Viacom's chairman and largest shareholder, had been unhappy with the lagging stock price and decided Freston wasn't moving fast enough to turn things around. Freston was in the job for just eight months.

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Yes, it's hard to feel sorry for CEOs when they take home at least 300 times what the average worker makes each year. Certainly, many of those leaving are going for good reason. Headline-grabbing exit packages often seem little more than a reward for failure. And the options backdating scandal ricocheting around Silicon Valley and elsewhere is often a testament to runaway greed. On Oct. 15, it claimed yet another head, that of United Health Chief Executive Dr. William W. McGuire, who plans to retire before Dec. 1.

Then again, intense global competition, a Street impatient for results, and regulators on the warpath are all contributing to corner office angst, too. CEOs feel understandably beleaguered, expecting the ax to fall any moment. "I'm always two quarters away from being a horse's ass," says Paul R. Charron, 64, CEO of Liz Claiborne Inc., who's stepping down in November after a strong 12-year run. "The market has a very short attention span. It's easier to criticize than to construct. You can get whacked in so many ways." And with the average CEO in the job just seven years today, almost two years less than two decades ago, some worry that short-term thinking is taking a toll. "Who will build the long-term future of these companies?" asks Yale School of Management professor Jeffrey A. Sonnenfeld.

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And you know something smells bad when soon-to-be CEOs spend much of their contract negotiations focusing on their inevitable departure. "When we put together a contract we are absolutely thinking about the end, the next job," says Wendi S. Lazar, counsel to Outten & Golden LLP, a New York employment law firm that represents executives in finance and elsewhere. "We're not getting paid to celebrate the wedding." Lazar's goal not only is to make sure that her client gets paid on his departure what he would have earned had he stayed, but that he is made whole for unvested options or restricted shares he left at the old job, too.

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