2015 was an interesting year for CEOs, and by the looks of it, 2016 will also hold its share of executive shake-ups.
Some have made egregious strategic mistakes, while others are cleaning up messes left at the table by their predecessors.
Still, others simply find themselves in the wrong industry at the wrong time.
But Wall Street’s never been the “kiss-and-make-up” type of problem solver. If a company severely underperforms and you have the misfortune of being amongst said company’s top brass … well, you’re already in the hot seat.
Ten of the worst CEOs on the planet are already on thin ice to begin 2016. By the time 2017 rolls around, some percentage of these chief execs will be gone, almost assuredly.
But who are they, and how have they managed to screw things up?
CEOs That Could Be Fired Before 2017: Marissa Mayer, Yahoo! Inc. (YHOO)
2015 Performance: -34%
Perhaps the most obvious inclusion on this list — it’s actually miraculous Marissa Mayer hasn’t been let go yet. Brought in in 2012 to affect a turnaround at Yahoo! Inc. (YHOO), Mayer has done quite the opposite.
Things have gotten so bad that Wall Street is valuing Yahoo’s core search and advertising business as nearly worthless, with almost all of the stock’s value coming from its Alibaba (BABA) stake and Yahoo Japan holdings.
The company is actually in serious talks to spin off or sell its core business for scraps. If that isn’t a straight-up admission of ineptitude, I’m not sure what is.
The fact that Mayer brought in consultants to figure out how to salvage the company — a job she was supposed to perform herself — was a cry for help last year.
She’s a shoo-in for almost any “worst CEOs” story you run across this year, and this piece is no exception.
CEOs That Could Be Fired Before 2017: Shigehisa Takada, Takata Corporation (TKTDY)
2015 Performance: -54%
Yahoo’s problems are serious, but from a corporate perspective it’s tough to imagine having a worse year than Shigehisa Takada.
As CEO of the Japan-based auto supplier Takata Corporation (TKTDY), Takada oversaw the company as it became embroiled in controversy due to defective airbags.
The airbags in question caused eight deaths and more than 100 injuries, spurring an outcry and prompting the recall of more than 30 million cars using Takata airbags. Not only is this an immediate threat to Takata’s performance, but it will likely damage long-term relationships with buyers as well.
Someone needs to take the fall for the snafu, and who better than the CEO?
CEOs That Could Be Fired Before 2017: Steve Ells, Chipotle Mexican Grill, Inc. (CMG)
2015 Performance: -29%
Steve Ells isn’t just the CEO of Chipotle Mexican Grill, Inc. (CMG), he’s the founder.
No exec is safe when you have the sort of horrendous year Chipotle did. Everything was dandy until October, when the first reports of E. coli at Chipotle stores began popping up.
More followed, and additional claims about the norovirus have also driven shares down.
It’s not only its intangible brand name that Chipotle has damaged, it’s the very tangible same-store sales. CMG recently alerted investors that the company was bracing for a same-store sales slump of nearly 15% in the fourth quarter — the first year-over-year decline in the company’s history.
CEOs That Could Be Fired Before 2017: Mark Trudeau, Mallinckrodt PLC (MNK)
2015 Performance: -23%
This may be a case of deja vu all over again for the pharmaceutical company Mallinckrodt PLC (MNK). After the infamous short-selling firm Citron Research put out a note on competitor Valeant (VRX) raising questions about the legitimacy of its sales numbers, CEO J. Michael Pearson was gone within months.
Citron would go on to accuse Mallinckrodt of being a “far worse offender” of the reimbursement system, calling it worse than Valeant, which shed 28% of its value last year.
Subsequently MNK raised the price of its infant seizure drug, Synacthen, by 2,000% percent, from $33.05 per vial to $680.
CEOs That Could Be Fired Before 2017: John Mackey and Walter Robb, Whole Foods Market, Inc. (WFM)
2015 Performance: -30%
Once the darling of the market, Whole Foods Market, Inc. (WFM) now finds itself shellacked by the competition.
Mackey and Robb have been longtime big shots at Whole Foods, with Mackey having founded the company himself. That said, the company is literally the butt of jokes right now for its absurdly high prices, and they both deserve inclusion on a list of today’s worst CEOs.
That may have worked back in 2011, but the first-mover advantage Whole Foods used to enjoy in the organic foods movement is almost entirely gone.
What’s more embarrassing is that the company was caught red-handed price gouging customers, mislabeling the weights of its products so it can charge more.
Those revelations did not go over well, and the company was forced to issue an apology. But sometimes, apologies aren’t enough, and someone has to go.
CEOs That Could Be Fired Before 2017: Eddie Lampert, Sears Holdings Corp (SHLD)
2015 Performance: -36%
Eddie Lampert should’ve been ousted years ago. The once-dominant Sears Holdings Corp (SHLD) continues to devolve into a cash-hemorrhaging machine, and things are not getting better.
The company is closing down stores, selling off real estate and spinning off its better parts, Lands’ End (LE), to shore up its balance sheets.
Still, the company’s miserable failures are accelerating the the revenue slump by the year. In fiscal 2012, revenue slid 2.6% and by fiscal 2015 the deceleration had reached 13.8%. Now, fiscal 2016 analysts are looking for a 19% slump.
That’s pretty darn bleak — but what may be bleaker is the fact that SHLD losses are also expected to pile up in the coming years, with Wall Street forecasting a loss of $9.89 per share in fiscal 2016 (it was $8.30 per share in fiscal 2015), and even steeper losses of $12.56 per share in FY 2017.
Get Lampert outta there, already!
CEOs That Could Be Fired Before 2017: Jack Dorsey, Twitter Inc (TWTR)
2015 Performance: -38%
I know, I know, he just took the reins. But it’s more and more clear by the day that Twitter Inc’s (TWTR) co-founder needs to find his way out as CEO.
Dorsey was ushered in as the new full-time CEO of the struggling social network in October after taking over for Dick Costolo, the maligned outgoing CEO of Twitter, in July. However, even Dorsey’s position as cofounder hasn’t been able to revive the plunging stock price.
Perhaps that has something to do with the fact that he’s also the CEO of the newly public payment processing company Square (SQ), which he also cofounded. Pulling double CEO duties was a contentious decision from the get-go, and Twitter’s board was reluctant to make the appointment.
That decision is probably well-founded, as investors in both companies are getting half-timed by their CEO.
CEOs That Could Be Fired Before 2017: Jack Dorsey, Square Inc (SQ)
2015 Performance: Flat
If Dorsey is spending half of his waking hours at Twitter, that means he’s pulling half-duties as CEO of Square Inc (SQ), too, at an extremely vulnerable time in the company’s history. After all, Square just went public in November, so it’s in the early days of quarter-to-quarter investor scrutiny.
I wouldn’t be surprised to see an activist investor of some sort take a large position in SQ stock and start pushing for a management shake-up. After all, the stock is already down 8% in 2016, and the year is young. Square is also discontinuing the relationship with its largest single corporate customer, Starbucks (SBUX), after Square ended up losing millions of dollars in the deal.
That begs the question: If Square can’t make money as a partner with Starbucks, is there something fundamentally broken with its business model? How can the company grow and be profitable in the future? Must it rely on small-time vendors — food trucks, local shops, and contractors — for all its growth?
If so, is that sustainable or even feasible? These are serious questions that remain, and Dorsey may not be the man to answer them.
CEOs That Could Be Fired Before 2017: Aldemir Bendine, Petroleo Brasileiro SA Petrobras (ADR) (PBR)
2015 Performance: -41%
Make no mistake, Petroleo Brasileiro SA Petrobras (ADR) (PBR) is a company steeped in an all-out existential crisis. Brazil’s state-owned oil company is reeling from a widespread bribery scandal that went all the way up to the top layers of the country’s government.
To make matters worse, commodities prices are still plunging, and with Saudi Arabia unlikely to shutter the oil spigot anytime soon, worldwide production remains high while demand is becoming more tenuous as the world’s second-largest economy, China, slows.
It’s true that Bendine was only recently installed as the Petrobras CEO in February 2015, and that he was handed the helm of a sinking ship. Still, his turnaround plan involves selling off $58 billion in assets through 2018, which, although possibly necessary, will only go so far in settling its long-term liabilities of a whopping $113 billion.
CEOs That Could Be Fired Before 2017: John Idol, Michael Kors Holding Ltd (KORS)
2015 Performance: -46%
Once upon a time, Michael Kors Holding Ltd (KORS) was the up-and-comer in the world of luxury fashion, seizing market share from the likes of Coach (COH) and Kate Spade (KATE). Alas, that was back in 2012 and 2013, and things are very different nowadays.
Under the overzealous guidance of CEO John Idol, KORS has gone back from whence it came, suffering in recent years from the same issue that proved to be Coach’s downfall — brand dilution.
By flooding the market with inventory, the once-elite Michael Kors brand can now be found for half-off at your local outlet mall.
In fiscal 2015, Idol made $15.1 million as the company’s stock plummeted, shedding 46%. There’s no end in sight, and about the only thing investors will applaud at this point — other than same-store sales picking back up — will be the replacement of Mr. Idol.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at firstname.lastname@example.org.
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