BUILDING A BETTER CEO

During normal times, serving as the chief executive of a big company is an enviable position: interesting work, rich pay and a corporate jet at the ready. During recent weeks, however, CEOs have been nearly as embattled as suspiciously muscled baseball players. Consider the news last week from America's boardrooms. Disney boss Michael Eisner, who'd already been pushed by opponents to schedule his early-retirement party for September 2006, agreed to depart a year earlier to make way for his successor, Robert Iger. At insurance giant AIG, founder Maurice Greenberg resigned under pressure from both his board and New York Attorney General Eliot Spitzer, whose office is investigating AIG. And then there's Bernie Ebbers, the former CEO found guilty on nine counts by a federal jury for the looting of WorldCom. Eisner and Greenberg look downright lucky compared with Ebbers, who faces up to 85 years in prison.

Throughout Corporate America, CEOs are being booted faster than off-key singers on "American Idol." During January and February, CEOs departed from 195 U.S. companies, according to Challenger, Gray & Christmas, a turnover rate nearly double last year's. Among the consultants, recruiters and management professors who make a living analyzing boardroom practices, there's growing recognition that a power shift is underway. "It's like we've moved out of the age of the imperial presidency," says John Challenger, who heads the eponymous outplacement firm. Driven by new legislation, activist regulators, unhappy shareholders and even restive employees, directors are challenging chief executives more vigorously than ever--and removing them if they don't like the response. To navigate this evolving landscape, today's CEOs need to learn the new rules of the road. With help from experts, NEWSWEEK compiled a partial list.

RULE 1: GET OFF STAGE BEFORE THE ORCHESTRA MUSIC BEGINS

At Disney and AIG, Eisner and Greenberg each spent decades in the top job. So has Sumner Redstone, who last week floated plans to split his media empire, Viacom, into two parts, to be run by the two deputies who've been vying to succeed him. "These are examples of monarchs who had 20- to 40-year rules, which is incredible," says Yale management professor Jeffrey Sonnenfeld. Most observers say the era when CEOs stayed in their jobs as long as network anchormen is fading; many agree with eBay chief Meg Whitman, who believes executives shouldn't hold the top job longer than 10 years (she's in year seven). Some say the ideal tenure is even shorter. "A lot of people will tell you seven years, and that's what I would regard as the norm," says recruiter Steve Mader of Christian & Timber. In 2004, according to Burson-Marsteller, 19.4 percent of the S&P 500 CEOs had been on the job more than 10 years. But smart CEOs keep in mind that even U.S. presidents are limited by the Constitution to two four-year terms.

RULE 2: THERE'S NO SUCH THING AS AN HEIR APPARENT

Retiring CEOs love to hand-pick their successor. But boards are increasingly viewing that pick as a mere recommendation and conducting a thorough search of their own. Consider Disney, where Eisner pushed directors to give the job to Iger, his deputy since 2000. But Disney chairman George Mitchell insisted to reporters that the board carefully considered other candidates, including eBay's Whitman, before settling on the inside choice. (Dissident shareholders Stanley Gold and Roy Disney still dismissed the search as a charade.) Iger's appointment is one more sign that instead of the big-name outsiders that boards liked to lure to top jobs during the 1990s, today's directors recognize the advantages of home-grown candidates. "Inside is better than outside, all things being equal," says Heidrick & Struggles recruiter Gerard Roche, who ran the Disney search.

RULE 3: YOU'RE NOT THE BOSS, THE BOARD IS

Business-school textbooks have always taught that a company's board of directors rules the roost. Until recently the world rarely operated in this manner; many CEOs held far more power than directors. Now, thanks to Sarbanes-Oxley and to courts' willingness to hold directors personally liable when a company fails, "they're really being pressured to be emboldened," say Carolyn Brancato, who trains directors at the Conference Board. That means CEOs need to keep communication lines open so directors, who are determined not to preside over another WorldCom- or Enron-style fraud, don't get surprised by bad news. The goal should be "to get this stuff discussed and vented in real time," says Sonnenfeld. "If there are problems, you want to hear about them"--preferably before the press release announcing you've resigned to "spend time with family."

RULE 4: CORPORATIONS AREN'T DEMOCRACIES, EXCEPT WHEN THEY ARE

It's an old saw among bosses that they'd rather be respected than liked. But lately many are learning there's a price to pay when you're not popular among worker bees. Among them: Carly Fiorina, whose lack of popularity among HP employees contributed to her losing support among directors, and, to borrow an example from the nonprofit world, Harvard president Larry Summers, whose lousy people skills earned him a vote of "no confidence" by his faculty last week. Such employee discontent flows faster these days, thanks to technology. "I think the Internet and e-mail and blogging have a great deal to do with speaking truth to power," says University of Southern California leadership professor Warren Bennis. To survive in this era, Bennis says, chief executives need to realize the world is more transparent than ever. That means being honest about good news and bad news. It also means not sending R-rated e-mails to employee paramours, an offense that got Boeing chief Harry Stonecipher canned last month.

RULE 5: CAREFUL WHAT YOU WISH FOR

With all these headaches, who'd even want to be CEO? It's an apt question. Leslie Gaines Ross, chief knowledge officer at Burson-Marsteller, has surveyed executives at Fortune 1000 companies, asking how many aspired for a promotion to the corner office. In 2001, 27 percent said they had no interest in becoming chief executive. By 2004, that number jumped to 60 percent. "You take a great deal of risk today in choosing the top job," Ross says. It's important to keep such survey data in perspective: thanks to huge compensation packages and mankind's instinctive appetite for power and perks, there will always be someone who wants to be the boss. But in this day and age, having the title of boss, and having real power, aren't necessarily the same thing.