by Will Ashworth | January 6, 2014 6:00 am
CEOs like Ford’s (F) Alan Mulally and Tesla’s (TSLA) Elon Musk are household names. Generally respected by investors, they’re in the news a lot getting plenty of credit for the success of their respective car businesses.
And while the accolades for Mulally and Musk are well deserved, there are other CEOs doing just as good a job receiving far less credit. After all, there have been plenty of business successes outside the automotive industry.
Who are these masked men getting little recognition for their work? Here are my top three most under-appreciated large-cap CEOs.
Ameriprise Financial (AMP) CEO Jim Cracchiolo has been in the top job since Sept. 30, 2005, when American Express (AXP) spun-off its asset management business.
Performing in the shadow of its much bigger parent, Cracchiolo led the company through the market downturn in 2008. Today, it’s incredibly healthy trading at or near its 5-year high of $115.36. Since the spinoff, AMP stock has achieved a cumulative total return of 285% — 181 and 206 percentage points higher than AXP and the SPDR S&P 500 (SPY) respectively.
It’s interesting that you don’t hear more about Cracchiolo because, according to Forbes, AMP’s CEO took home $48 million in 2012, including a $35 million windfall for stock options. Cacchiolo’s pay package was the second-highest in financial services bested only by BlackRock’s (BLK) Laurence Fink who collected $76 million in total compensation. How has BlackRock’s stock done since Sept. 30, 2005? It has achieved a cumulative total return of 326% — 41 percentage points greater than AMP; that’s good but hardly worth an additional $28 million in compensation.
Both Cacchiolo and Fink demonstrate how pay-for-performance is supposed to work. Shareholders did well as a result … and so did their CEOs.
Since Brian Kelley was announced as the new CEO of Green Mountain Coffee Roasters (GMCR) on Nov. 20, 2012, GMCR stock has achieved a total return of 176% — 161 percentage points higher than Coca-Cola (KO), Kelley’s former employer. Kelley was specifically hired for his “strong combination of operational expertise, consumer product and brand experience and strategic insight,” said Michael J. Mardy, then-Interim Chairman of the Board.
Kelley left a position where he was in charge of 68,000 Coke employees in order to jump aboard a maturing business like GMCR that’s still growing. The leader in single-serve coffee, GMCR was suffering from K-cup fatigue. It needed to bring in someone who could strengthen its existing business from an operational standpoint while still moving forward with interesting innovations like the Keurig Cold, which it’s expected to unveil in fiscal 2015. At a December beverage industry conference, Kelley revealed that the new system would achieve carbonation without a CO2 cylinder, something the SodaStream (SODA) system can’t.
While Kelley’s managed to solidify GMCR’s business — and the price of its stock — the big test will come when it actually introduces Keurig Cold. If the machine is a hit, this stock will blast well into triple digits. Long-time shareholders must be thrilled with Kelley’s performance over the past 13 months. As for other investors … I’m not sure they even know who he is.
Donnie Smith has been CEO of Tyson Foods (TSN) since Nov. 19, 2009. At the time of his appointment, he’d already worked for the Arkansas food producer for 29 years, joining right out of college. Smith wanted to be a veterinarian, but his 3.3 grade point average in animal science at the University of Tennessee wasn’t good enough and so he applied to work at Tyson and the rest is history.
It’s estimated that 9 billion people will be living on earth by 2050. To feed all those people, food production will have to double from where it’s at today. To achieve this feat, big food companies like Tyson are a necessity. Smith, who doesn’t serve on the board of directors, earned $9.9 million in the fiscal year ended Sept. 28, 2013. Investors have seen TSN stock increase by 74% in 2013 and 167% since Smith took the top job in 2009.
Born in a small town in Tennessee, Smith has always been concerned about animal welfare. This concern led the company to create the FarmCheck Audit Program in October 2012, a program that’s intended to ensure that all 12,000 farms that supply TSN treat the animals humanely. I’m sure reports like the NBC News broadcast in November detailing abuse of pigs at one of Tyson’s pork suppliers in Oklahoma can’t be well received at corporate headquarters.
A faith-driven company, I’m sure Smith will continue to do the right thing and root out the bad operators that clearly exist. In the meantime, shareholders should expect to continue benefiting from Smith’s quiet leadership.
As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.
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