By Walter Frick, senior associate editor, Harvard Business Review |

In October 2000, Jack Welch announced the biggest deal of his 20-year tenure as head of GE: a $45 billion merger with Honeywell. Shortly thereafter he was forced to retire, due to GE’s mandatory retirement policy for CEOs turning 65.

More than a third of S&P 500 firms have a mandatory retirement policy for their CEO. Their aim is to drive out executives who are past their prime. But are such policies a good idea?

Yes, but with some caveats.