The quarterly reporting process does put perverse incentives on the CEO that cascade through the company. I've seen it first-hand. To meet the shareholders' shortsighted demands for steady growth and accurate short-term budget forecasts, the corporate budgeting process is a top-down bureaucratic affair that emphasizes predictability at the expense of long-term profits.
If a small department has a great set of low-risk, high-reward projects, but runs out of budget, the company should run the project so long as the risk-adjusted reward is greater than the cost of capital. But instead, they must stick to the plan.
I certainly agree that Enterprise CEOs do have to be doing a good job in the view of the board, exactly like any employee has to do a good job in view of their supervisor if they wish to retain their job. The board can fire them. But that also raises the question of how much is the continued presence of a 'bad CEO' the Board's fault.
And I don't agree at all with this statement The problem for enterprise CEOs is that there are painful, obvious conflicts between Wall Street's persistent demand for high quarterly returns, the on-the-ground demands of keeping a business healthy and growing, and the value of their own personal stake in the company.
If the stock price is a proxy for the health of the company and the CEO is in charge of keeping the company healthy, then the stock price and the CEO are aligned. I've only really been on 1:1 speaking terms with two enterprise CEOs, Scott McNealy (Sun) and Dan Warmenhoven (NetApp). And neither of them was 'conflicted' about what Wall Street 'demanding' high quarterly returns, nor did the noise of traders on Wall Street enter into their business decisions as far as I could ascertain. When decisions were made and communicated they are very solid reasoning behind them around how the choice would improve the company. I have also seen startup CEOs that made extraordinarily bad decisions that benefited themselves personally at the expense of the company, both Zynga and Groupon showed how painful that could be. But when you look across the millions of companies, just in the US, it is hard to find a persistent, or even prevalent, pattern of CEOs who put themselves or by proxy the stock price, ahead of the company issues. I am certainly open to evidence that this is the case, I just haven't seen it.