Selecting a CEO of the year.

The ghost of Carly Fiorina hung over our recent judging session for this year's CEO of the Year. Given that she was in office for five and a half years only to crash and burn, and that the median CEO tenure at a major company is only four years, how can anyone judge whether Fiorina--or any chief executive--has really done the job well?

That was the challenge facing Fred Smith of FedEx, our 2004 CEO of the Year and the chairman of the judging panel, as well as two former honorees, Sandy Weill of Citigroup and Herb Kelleher of Southwest Airlines. Two other judges, Joe Tucci of EMC and Pat Russo of Lucent, completed their three-year tenures on the selection panel. Rounding out the panel of seven were Mike Critelli of Pitney Bowes and Scott Serota of the Blue Cross and Blue Shield Association.

To be sure, our judges did make a selection--George David of United Technologies, who has enjoyed a spectacular run over a 10-year time frame. Look for insights into just how he's accomplished that in our cover story next month.

The 90-minute judging session, held at the Ritz-Carlton in Washington, was revealing in many ways. Any CEO who takes office is, for about two years, essentially riding on the momentum created by his or her predecessor, several judges said. New products hitting the marketplace often were developed under the previous regime. And it can take two years to get settled into the job and really take the reins of a company, particularly if it's a big one.

Partly because of the Fiorina debacle, the judges remained skeptical about mergers and acquisitions. If a CEO had been through a merger or was undertaking a new one, that produced a note of caution in the judges' minds. Mergers can either artificially inflate a company's earnings for a period of time or conceal deep flaws in management or strategy, as was the case at HP.

Sitting at the judges' table, the thought that struck me was that if the median tenure is only four years, the real test of a CEO's performance may lie in how well he or she created a strong culture and succession strategy for the longer term. Developing bench strength and fostering a rational succession-management process, with the board's involvement, ultimately can be a much better indicator of a CEO's success than hitting financial targets of any sort while in office.

Because of the care that our CEO of the Year judges have consistently displayed, the selection process has avoided the pitfalls of choosing a Jeff Skilling or Dennis Kozlowski. George David is our 20th CEO of the Year. He joins what is in effect our Hall of Fame, with other inductees such as Michael Dell, John Chambers, Jack Welch, Bill Gates, Larry Bossidy and Andy Grove. We intend to offer the wisdom of previous CEOs of the Year in a fall special report.

Here's just a snippet of wisdom from Kelleher: When asked what advice he would give to an aspiring chief executive, he said, "Don't act like one."

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