Office space: the true cost of free rent for former CEOs.

CEOs are under as much pressure to perform today as at any time in the history of the Republic. Harried by Sarbanes-Oxley, harassed by predatory hedge funds, badgered by dissident shareholders, and subjected to the remorseless scrutiny of the press, CEOs bitterly complain about how hard it is to make any important decisions while the madding crowd is clamoring at the door.

But if there is any single group that creates an atmosphere in which CEOs find it impossible to function, it is not meddlesome shareholders, insurgent directors, demanding investors, or mean-spirited inquisitorial journalists. No, the single greatest obstacle to getting any work done is the constant distractions from former CEOs who have been given rent-free office space in the headquarters of the companies they previously headed.

"Giving my predecessor a corner office was the worst mistake this company ever made," fumes the current CEO of a Lowell, Mass., semiconductor manufacturer. "The parties, the late-night carousing, the exotic dancers hanging from the chandeliers at all hours of the day and night. I'll tell you, for me to get any work done around here I have to leave early and spend the entire day holed up in my den."

A Menlo Park, Calif., CEO at a biodegradable fiber-optics network echoes this sentiment. "When Chuck retired, we offered him a rent-free office down the hall. What we didn't know was that as soon as he packed it in as CEO, Chuck was going to take up the accordion. From the time I get here in the morning till the time I leave at night, it's 'Lady of Spain,' 'Roll out the Barrel' and 'The Pennsylvania Polka' rocketing down the hallways. The only way to get any work done is to wear headphones all day."

This problem of the CEO who won't go was discussed at length recently in a very fine Wall Street Journal article. The article stressed that most retired CEOs keep a low profile and avoid direct involvement in company business unless approached for advice by their successors. The Journal also noted that this classy perk has been criticized by the usual penny-pinching corporate governance grinches, who deem it a waste of shareholders' money.

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What the Journal failed to address, however, is the shockingly large number of retired CEOs whose refusal to vacate the premises is making life miserable for their replacements.

"I thought we were being nice when we let Harry take an upstairs office after he handed over the reins," groans a CEO at a midsized Philadelphia accounting firm. "But if I'd known that he was going to spend the next six years dribbling a basketball directly over my head, I never would have signed off on it. Harry's a smart guy, a legend in the industry. But I'd rather take a 50 percent pay cut than have to spend the next 10 years listening to that thumping."

Other CEOs have similar complaints. "The mariachi bands, the tai-chi classes, the 48-hour Texas-Hold'em tournaments have all had a demoralizing effect," reports Randy Bivacqua, managing director of Executive Reaction, a firm that specializes in evicting retired CEOs who abuse their privileges. "One ex-CEO was running spinning classes out of her office. A second turned his office into a cigar lounge. Another sublet his suite to two Panamanian bounty hunters. It's just not right."

Increasingly, incoming CEOs insist that their predecessor's office be located in remote parts of the building or completely off-site. Moreover, many companies are establishing performance codes to which ex-CEOs must adhere or risk getting turned out into the street.

"We've made it perfectly clear to Chuck that the accordion is no longer welcome," says the Menlo Park CEO. "And if Chuck stows the accordion and then shows up here with a set of bagpipes, I'm going to grab a baseball bat and pay him a visit."