It’s easy to malign corporate executives for their mammoth pay, golden parachutes and lack of accountability. But investors shouldn’t make the mistake of thinking that all CEOs are just charlatans with MBAs. The fact is, a truly innovative and energizing leader is worth his or her weight in gold.
Especially to shareholders, when that vision results in very tangible profits.
Of course, share price isn’t the only measure of success, so the best performing stocks of 2012 don’t necessarily have the best CEOs. But one thing these standout CEOs have in common is standout stock performance that handily beat the market.
Here are my three best CEOs of 2012, based on the performance of share prices but also based on how management rose to the occasion in the past 12 months:
Jeff Bezos, Amazon
Jeff Bezos, the founder and longtime CEO of Amazon.com (NASDAQ:AMZN), regularly tops the list of big-time execs at the top of their game. However, 2012 was a very important year — especially for its Kindle tablets.
While notoriously cagey about devices sales, the Kindle Fire has been an unmitigated success. The touch-screen tablet debuted about a year ago just in time for the 2011 holidays, and the Kindle Fire HD was released this year. The duo of devices has firmly cemented Amazon as a player in the tablet market despite the dominance of the Apple (NASDAQ:AAPL) iPad.
In fact, the Kindle made Tim Cook contradict the famous Steve Jobs line that Apple would never make a 7-inch tablet, that such a device is “dead on arrival”; Apple launched an iPad mini (7.9 inches, of course) this year to counter the Kindle’s success.
Amazon literally bet everything on the Kindle, breaking even in its fiscal second quarter of 2012 and plunging to a loss in Q3. That’s because Bezos finally admitted what everyone had long assumed — that the company is selling its Kindles at cost, and hoping to make the money on the back end via content.
It seems to be working. And though many investors quibble with the nosebleed P/E of this company, it’s hard to argue with run of more than 40% in 2012.
Glen Murphy, The Gap
In late 2011, some shareholders of The Gap (NYSE:GPS) were just about finished with the so-called turnaround plan of CEO Glen Murphy. Its Q3 numbers reported just before Thanksgiving last year were ugly, with profit down 36% year-over-year and same-store sales falling at a 5% rate, the fastest rate in a year.
But Murphy, who has been at the helm since 2007, stuck with it. He continued slogging away: opening some 30 stores in China this year, pushing the online sales game to prop up sales numbers and re-energizing the all-important women’s line at Gap, Old Navy and other storefronts. Fiscal 2013 profits are set to soar 44% over 2012 numbers, and revenue has increased year-over-year in three consecutive quarters.
Sales are now on track to hit their highest level since 2008, before the financial crisis. As a result, the stock has soared over 60% year-to-date.
Turning around a retail stock is no mean feat even in the best of times, thanks to the fickle nature of consumers — particularly the all-important teenage demographic with disposable income. But turning around a retail stock in tight times when price points are crucial is downright daunting.
Glen Murphy deserves a lot of credit for sticking with it and getting Gap back on track in 2012.
Jeff Weiner, LinkedIn
Not so fast. LinkedIn (NYSE: LNKD) is a legitimate, profitable, growing business with a bright future. And CEO Jeff Weiner may not have as high a profile as some of these other social media execs, but he deserves some attention on this list.
- At $115 a share, LNKD is triple its IPO pricing of $45 a share in May 2011, and shares are up over 80% in 2012.
- Revenue is set to grow 80% this fiscal year, and the company is soundly profitable despite other social media stocks bleeding cash.
- LinkedIn continues to grow ambitiously in the enterprise space, with job marketing services for businesses as well as premium services for individuals. The service has some 190 million members and counting.
It’s a great place to be as job seekers get increasingly wired and rely more and more on networks instead of random classified ads to find work. And LinkedIn is shrewdly maintaining its bottom line by diversifying as it grows.
A lot of LinkedIn’s success probably has to do with the fact that CEO Weiner joined LinkedIn in 2008 after serving as a vice president at Yahoo! (NASDAQ:YHOO). Unlike other social failures like Groupon or Zynga, where roguish boy wonders have crashed and burned as CEOs thanks to hubris, Weiner is an actual executive with actual business experience.
A few years ago, we may have thought that being the CEO of a social media company would be the easiest job in the world — a license to print money, being in the right place at the right time.
The epic crash of stocks in this sector proves that is hardly the case, and the runaway success of LinkedIn under Weiner’s leadership is all the more impressive as a result.
The Harvard Business Review just came out with its January-February issue that highlights the 100 best performing CEOs in the world. It’s weighted across the CEOs’ tenure, not just for 2012, and the list is weighted for shareholder value, not necessarily innovation or true leadership. Still, the list is noteworthy. Top execs here include:
- The late Steve Jobs of Apple. Under his leadership, the company grew its share price by over 6,600% since 1997, adding about $350 billion in market cap over the same period.
- Jeff Bezos of Amazon. Since 1996, his company has added $100 billion in market cap and seen 12,000% appreciation in its stock.
- Yun Jong-Yong of Samsung (PINK:SSNLF). From 1996 to 2008, the company added over $120 billion in market capitalization and saw shares soar over 1,550%.
Also worth noting: Doug McIntyre has his list of top CEOs for this year. LinkedIn’s Weiner makes the end of his list. But the top three are:
- Sprint (NYSE:S) leader Dan Hesse, of whom McIntyre writes: “Hesse found an investor willing to buy a majority interest in the company — not an easy task given how badly positioned the third-place cellular company in the United States has been.”
- eBay (NASDAQ:EBAY) CEO John Donahoe, who rejuvenated the auction business at the online company and fueled growth with its “Marketplace” model.
- Devid Nelms of Discover Financial Services (NYSE:DFS), who helped the company evolve “into a lending company, with sizable student and home loan businesses.”
- Get the full list of the best CEOs according to Doug McIntyre in his list of top CEOs for this year. (24/7 Wall Street)
- Read the full take on Harvard’s 100 best performing CEOs in the world. (Harvard Business Review)
- For the other side of the coin, you can check out my list of the worst 3 CEOs of 2012 here. (The Slant)
- And while we’re talking about the “best,” let’s not forget the “best paid” CEOs of 2012. The leader is David Simon of Simon Property (NYSE:SPG) with a cool $137.2 million earned this year. (TheRichest.org)
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he held a long position in Apple but no other stocks named here.