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Inside the CEO of the Year Selection Committee

Our annual CEO of the Year selection meetings are short but fascinating. They are off the record, so I can’t …

Our annual CEO of the Year selection meetings are short but fascinating. They are off the record, so I can’t tell you who said what about whom when we met at the headquarters of American International Group in New York to go over our list of distinguished nominees.

But I can share insights about how chief executives evaluate each other. First, they don’t trust short-term results. Their sense is that most anybody can assume the reins of a company in distress, take a big writedown and get the results pumped back up by Year 2. They also are skeptical about an acquisition-based growth strategy. So our judges don’t really trust leaders’ performances until they have a track record of at least four years. Since the average CEO tenure is only four or five years, that leader has to get just about everything right from the day he or she moves into the corner office.

Being global is essential. It’s one thing to build a regional or national company. But it’s entirely another to run a company that operates around the world.

Another common theme is that not all CEOs are created equal. Those who build a company from the ground up typically earn higher marks than those who merely manage an established organization. “A lot of chief executives demonstrate leadership, but not many demonstrate real vision,” one judge remarked.

Integrity also matters more than ever. Our judges were extremely sensitive to the composition of boards and whether those boards exercise best practices. They also care whether a candidate has personally been involved in giving back to their community.

For all these reasons, our competition is brutally intense. My thanks to the judges for their hard work. We’ll be announcing the 2004 CEO of the Year in coming months.

About William J. Holstein

William J. Holstein