SHOULD YOU INVEST IN A LONG-TERM CEO?
By Mark Alpert

(FORTUNE Magazine) – Surprisingly, you could do worse. About 10% of the 1,000 biggest public companies in the U.S. are run by chief executives who have held the job for more than two decades. But that doesn't mean there's a lot of deadwood in those corner offices. Graef Crystal, a professor at the Haas School of Business at the University of California at Berkeley, calculates that companies with veterans of 20 or more years at the helm have given investors an average annual return of 18.3% since 1970, vs. 14.1% for all large companies. Says he: ''CEOs, like wine, do improve with age to some degree. Maybe it's a Darwinian thing -- if they don't produce, they don't last.'' There are exceptions (see above for a sampling of long-time CEOs and what they've done for their shareholders over the past ten years). But Crystal's findings clash with the conventional wisdom that CEOs become less open to new ideas as their tenure lengthens and less productive. Many of the durable CEOs are company founders or their descendants, and often own a considerable piece of the corporations they run. In fact, long- term CEOs have investments in their companies' stock worth an average $107 million each. Such voting power could help to explain their longevity in the job, but not their performance. CEOs of the usual retirement age who stay in their jobs tend to drive away talented successors. Look at Chrysler: Lee Iacocca has had the job only ten years, but he is 65 and says he will stay until he is at least 67. His heir apparent, Gerald Greenwald, has left to run UAL (for more, see Managing). Says Emory University professor Jeffrey Sonnenfeld: ''If a company doesn't get new leaders, it blocks the opportunities for all the other people in the pipeline, and the firm's future is mortgaged.''