Recent CEO successions are shining a bright light on a crop of talented individuals who will have to steer their public companies successfully through choppy economic, legal and regulatory waters. To do so, this generation of leaders will be required to have granular knowledge of how technology, economics, regulation and the capital markets can play for, or against, them.

The newly anointed CEOs include PepsiCo's Indra Nooyi, its first woman chief executive and the top-ranking woman of the Fortune 500; U.S. Bancorp's Richard Davis, who will succeed CEO Jerry Grundhofer in December (Grundhofer retains the chairman title); and Harris Bankcorp's Ellen Costello, who took the reins from Frank Techar, now with parent BMO Financial Group.

Becoming CEO of a public company once held nothing but allure for those fortunate enough to ascend. But today's CEO must perform in a more competitive, increasingly global environment while also wading through myriad complex regulations. It's no picnic-and it shows. In 2005, 15.3 percent of CEOs of public companies left office, up from 12.9 percent in 2000 and nine percent in 1995, according to research by Chuck Lucier, Paul Kocourek and Rolf Habbel for the magazine strategy+business.

CEO turnover set a record in 2005, with more than one in seven of the world's largest public companies making a change. That marks an increase from the one in 11 companies that did the same a decade earlier, according to Booz Allen & Hamilton's annual study of CEO succession.

The difference between the 1995 and 2005 corporate playbooks is managing the company's assets for stakeholders, versus managing the bottom line for investors. That focus is even greater today, with activist shareholders holding CEOs and boards accountable for what does-or doesn't-go right. And SEC rules requiring more transparency about executive compensation will arm the investing public with additional information to assess the value of a CEO's contribution.

The study found that, over the long term, insiders have a better performance record than CEOs brought in from the outside. In the first two years, though, the opposite is true: Outside CEOs post returns nearly four times greater than those of insiders. Nooyi, Davis and Costello are all insiders.

Even more, North American CEOs who do not hold the chairman title produced returns three times higher than those who serve as both chairman and CEO.

CEOs of public companies will have to balance big thinking and ambition with greater transparency and oversight. The key is building performance-driven teams that do more than just tow the bottom line. (c) 2006 U.S. Banker and SourceMedia, Inc. All Rights Reserved.

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