by James Brumley | December 27, 2013 9:57 am
We already reflected on the year’s best CEO performances, with obvious names like CEO rockstar Elon Musk of Tesla Motors (TSLA) and drone-master Jeff Bezos of Amazon (AMZN) getting nods on our top ten list. But you can’t have the good without the bad, so it’s time to take a look at the other side of the coin.
Sadly, the contest for the worst CEOs of 2013 was a close race featuring an unusually large field of qualified entrants. As is the case with any race, however, someone’s gotta reach the finish line first.
Going from “least bad” to “biggest disaster,” here’s a look at the worst CEOs. Heck, in retrospect, we probably wish these guys had never been hired in the first place … but some of them are still around to do more damage.
Take a look:
Companies make mistakes. Luckily, most of them are forgivable. But it’s pretty tough for the public — consumers as well as investors — to forgive a mistake or two when that company then gets a bit indignant about it, ultimately blaming its customers.
Enter Christine Day — former CEO of Lululemon (LULU) — and Chip Wilson — former chairman of LULU.
In March, consumers cried foul when they realized that some Lululemon yoga pants were a tad transparent. The snafu ultimately led to a wave of bigger quality control concerns, which in turn led to the resignation of Day.
Chip Wilson made things even worse for LULU, though. Just a few months after the Lululemon CEO stepped down (sending LULU stock falling off a cliff), Wilson opined on Bloomberg TV that “quite frankly, some women’s bodies just actually don’t work for it (Lululemon pants).”
All but calling some of your customers “fat” at a point when you can afford no bad publicity at all was hardly a smart move, and Wilson announced his resignation a few days after the gaffe. Unfortunately, new management likely won’t erase the double dose of damage that both Christine Day and Chip Wilson caused Lululemon this year.
Truth be told, most of the damage Aubrey McClendon inflicted on Chesapeake Energy (CHK) as CEO occurred in 2012. He was only the chief of the natural gas explorer for a few weeks in early 2013 before being fired in January. Yet even in his firing he managed to log one last controversy.
How could he do even more damage by walking out the door? After all, Aubrey McClendon sent Chesapeake into a troubling cash-strapped situation and personally borrowed money from a business associate of the company’s. Oh yeah … he was also running a $200 million hedge fund that traded oil and gas futures, creating a curious conflict of interest as the head of a company that develops oil and gas wells. McClendon could potentially personally profit from the very thing that could (and almost did) crush CHK.
Answer: By being fired — “without cause” — rather than retiring, McClendon banked another $47 million on top of the $300 million he earned over the span of the prior five years. His termination also meant the $11 million debt he owed the company from a 2008 bonus was ultimately forgiven. All of the excess compensation ultimately comes out of the pockets of CHK stock holders, too.
If you thought what Lululemon founder Chip Wilson said was bad, you ain’t heard nothin’ yet. Abercrombie & Fitch (ANF) CEO Michael Jefferies really raised some eyebrows by publicly saying:
“Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong in our clothes, and they can’t belong.”
Granted, the words were spoken in 2006 and only began to circulate in earnest this year. Still, Michael Jefferies has a history of making similar observations, and that makes it difficult to overlook any questionable thing that comes out of the Abercrombie & Fitch CEO’s mouth.
Consumers are finally starting to struggle with his ability to be a jerk — and likely the fact that cool kids don’t want to shop at Abercrombie anyways. They have been steering clear of the shops, and ANF stock is down around 30% in 2013.
He was only at the helm for a year and a half, but during that time Ron Johnson did a massive amount of damage to JCPenney (JCP). Indeed, JCP may not survive — despite the fact that the new JCPenney CEO (who was Johnson’s predecessor and successor) made our top-ten list for his efforts.
It’s not the damage to the brand name or to the company’s finances that puts Ron Johnson near the top of our worst CEOs list, however. It was the JCPenney CEO’s refusal to test or even discuss any of the major overhauls he wanted to implement before rolling them out company-wide.
The end result is clear: JCPenney is now hanging by a thread and JCP stock has lost three-quarters of its value since the beginning of 2012. Of course, Johnson isn’t around to pick up any of the shattered pieces.
Every change Ron Johnson made as the JCPenney CEO may have been equivalent to throwing gasoline on a burning fire … but it’s not as if he accepted the role with the intent of breaking the company up just because it made mathematical sense to do so.
It’s not clear if the same can be said of Eddie Lampert. He has been systematically selling off even some of the most profitable stores within the Sears Holdings (SHLD) chain.
Sure, there are still more than 2,000 stores remaining … but since 2010, about 300 Kmart and Sears stores have been shuttered, sold or not had their leases renewed. The end result is 27 straight quarters of declining sales. And there’s no end in sight to the deteriorating top line, considering the turnaround plan for this Sears CEO has largely been one of shrinking the company to success.
Under Lampert’s guidance, the 120-year-old retailer — and cultural icon — may have been weakened beyond salvaging.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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