by Jeff Reeves | December 30, 2011 6:00 am
There’s no doubt about it: It’s a jungle out there on Wall Street, and a lot of chief executives are under fire these days. It was easy to justify that big bonus and corner office when times were good and everyone was rolling in profits — but now that the economy is very challenging and even good stocks have trouble getting ahead, the bar is significantly higher for company leadership.
The worst CEOs tend to make themselves pretty obvious as their company struggles and shares plummet. That’s not a knock on anyone’s character — Carol Bartz might be a great host for bridge, but you’d be hard-pressed to find someone who thinks the former Yahoo (NASDAQ:YHOO) CEO was unfairly fired after her big plans to revitalize the struggling media giant failed rather painfully.
In business, results matter. And if you don’t get results in this market, you probably don’t deserve to be CEO.
The best CEOs are harder to pin down because good ideas can take time to develop and often can’t be attributed to just one guy behind a desk at a mammoth corporations. Besides, some of the best-run companies on Wall Street make succession plans a long-term process — look at IBM (NYSE:IBM) with its very deliberate passing of the torch to company insider Virginia Rometty, or Apple (NASDAQ:AAPL) planning for years to accommodate Steve Jobs’ departure and Tim Cook’s elevation to CEO.
That said, it’s hard to believe the person in charge at the company is just sleeping under her desk while the stock price goes up and sales continue to improve.
So who are the best and worst CEOs in the Dow across 2011? Let’s take a look using the simple proxy of share price, earnings per share and revenue gains as an indication of their performance this year:
The easy winner for best Dow CEO in 2011 is McDonald’s (NYSE:MCD) leader James Skinner. Skinner has presided over a 31% rise in share price for MCD stock this year, the best in the entire Dow Jones Industrial average. McDonald’s also has enjoyed what is projected to be a 12% jump in fiscal 2011 earnings over last year and an EPS gain of 14% over 2010 numbers. This comes as just the latest in a long line of gains for McDonald’s — the stock is up more than 300% since Skinner took over in 2004, compared with just 15% gains for the broader market.
Although the long-term performance hasn’t been as dramatic, Home Depot (NYSE:HD) CEO Francis Blake deserves credit for a 20% gain in share price this year and continued growth in revenue and profits (at least compared with 2010 numbers). HD obviously has systemic challenges created by a battered housing market, but Blake has kept Home Depot in good standing with investors. Home Depot also has managed to boost its dividend 22% since 2010, showing that it’s happy to share its wealth with shareholders.
Brian Moynihan took hubris to a new level this year by trying to act like a few hours of community service offset the irresponsible lending, robo-signing and fee proposals that have caused Bank of America (NYSE:BAC) to rank among one of the most hated companies in the U.S.
But investors don’t need to get philosophical to find reasons to pick on Moynihan. He has piloted an ugly 60% decline in BofA stock this year — giving shares a performance of -66% since he took the helm of this financial stock.
Say what you want about the challenges facing banks or the fact that Moynihan took a job with almost no chance of success — the bottom line is that other banks haven’t fared as poorly. Jamie Dimon over at JPMorgan Chase (NYSE:JPM) might be a soulless fat cat who thinks rich folk need tax breaks, but his bank is at least back to 2005 levels and has managed to find some measure of stability. It’s a tough job, but not impossible.
Besides, Bank of America just awarded Moynihan some $9.05 million in shares of BAC stock — meaning that even if he doesn’t care a whit for the company or shareholders, he has to prop up share prices to make his bonus worthwhile. If that doesn’t motivate a CEO, what will?
You can’t really hold Apotheker 100% accountable for all of the woes at Hewlett-Packard (NYSE:HPQ). For starters, he was fired midway through the year and his tenure was just short of 12 months — hardly enough to have an impact. However, as with Moynihan, it’s not an excuse to claim that you are in a no-win situation. HP clearly showed signs it was one of the worst-run corporations in America — and it was Apotheker’s job to fix it. Instead, he presided over a 40% slide in share prices in less than a year. And HPQ stock actually was even lower on the day he was ousted than it is now. A spate of ill-advised mergers, a knee-jerk announcement it would kill mobile device manufacturing and a host of other headlines make for an ugly body of work — even in that short time frame.
To find out the best and worst CEOs in the Dow, check out our Dow Leaderboard feature that gives live returns for all 30 Dow Jones Industrial Average components. You can sort the stocks based on returns since the current CEO took over and see how shares have performed on their watch.
Jeff Reeves is the editor of InvestorPlace.com. Write him at email@example.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, Jeff Reeves was long Alcoa but did not hold a position in any of the aforementioned stocks. Check out InvestorPlace.com’s other looks back at 2011 and ahead to 2012 here.
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