Hall of Shame

stock market dunce
Sponsored By:

The 3 Worst CEOs of 2012

CEOs tend to get too much blame when things sour and too much credit when things go right. Sometimes, it’s just a trick of happenstance — a secular trend that changes the market, or previous efforts that finally begin to nudge the bottom line. And at a mammoth corporation with tens of thousands of employees, a lot more goes into the daily grind than just one person’s input.

But in a select few cases, big successes or failures at a company can be almost wholly attributed to the man or woman at the top. These big visions for a turnaround or an evolution can be a massive catalyst for change … both good and bad, depending on the outcome.

So who are the best and worst CEOs on Wall Street this year? Here’s my list:

Worst CEO: Ron Johnson, JCPenney

JCPenney (NYSE:JCP) once had a hugely powerful brand. I know because my mom still frequents the store where I bought my Levi’s every summer before school started.

Or at least she used to, before former Apple (NASDAQ:AAPL) retail guru Ron Johnson mucked things up by providing crazily optimistic guidance that had to be revised down three times in four quarters, presiding over a same-store sales crash and doing away with the beloved coupon/sale cycle … only to try and reinstate it.

Sure, JCP is a multiyear turnaround plan, by Johnson’s own admission. But year one ain’t going well, what with the suspension of the dividend, the 26% decline in quarter-over-quarter same-store sales after double-digit declines in the previous two quarters, and a share price that is down more than 50% from its early 2012 highs.

Galling enough … and Johnson’s compensation of a cool $53 million in 2011 before any he could even get to work on this ill-advised plan is just icing on the cake.

Even if JCP eventually does turn around, Ron Johnson’s performance in 2012 is horrific, and he has no one to blame but himself. Frankly, I think he should be fired.

Runner-Up for Worst CEO: Andrew Mason, Groupon

Andrew Mason of Groupon (NASDAQ:GRPN) is not just a bad exec. To many people, he is the personification of the 2011/2012 social media IPO bubble.

He was an accidental manager, a software engineer who somehow stumbled into an executive position. Then he couldn’t step aside, and the company has paid the price.

The sins are legion. There were promises Groupon was “wildly profitable” that had to be retracted. There were shady accounting practices. Senior management departures even have their own subheading in the company’s Wikipedia entry because there have been so many under Mason’s watch.

Merchants complain about margins and no repeat business. Customers are losing interest. Competitors are gaining momentum — not good for roughly one year as a publicly traded company.

Oh, and the 80% share decline in Groupon stock is an issue too. But hey, the stock has doubled from its 52 week low of $2.60 a share in November … so I guess there’s that!

I think Mason should be canned as well. Shareholders of Groupon don’t have much to look forward to, but his departure could provide at least some comfort, if not a short-lived bounce.

Dishonorable Mentions

Herb Greenberg picks his list of worst CEOs of the year, including Mason and Johnson but also:

  • Kodak’s Antonio Perez — After driving the company into the ground, he was allowed to keep his foot on the accelerator as the clock ran out … and since he has presided over the mess at Kodak since 2005, he deserves at least some of the shame of its failure.
  • Steve Ballmer of Microsoft (NASDAQ:MSFT) — Windows 8 and Surface don’t seem to be doing as well as hoped, and the company is in the middle of a painful transition to a post-PC age that many think it cannot win. Still, Microsoft is actually up 6% this year.
  • Marc Pincus of Zynga (NASDAQ:ZNGA) — Another Web 2.0 darling who has presided over a stock crash, Pincus is over his head amid a competitive mobile gaming landscape and grasping at straws with gambling plans. Shares have crashed 74% year-to-date.

BusinessWeek also has a list of bad CEOs with some great names beyond the ones mentioned. It includes:

  • Best Buy (NYSE:BBY) exec Brian Dunn — The company continues to circle the drain and even made a move to gut margins further during the all-important holiday shopping season … prompting me to wonder whether Dunn is tanking BBY on purpose to give founder Richard Schulze the best price when he takes the company public? Shares are off almost 50% in 2012.
  • Aubrey McClendon, CEO of Chesapeake Energy (NYSE:CHK) — BusinessWeek turns the spotlight of shame on McClendon, who presided over a massive accounting scandal at the firm because he “apparently has trouble keeping his company’s finances and his own apart.” McClendon borrowed as much as $1.1 billion in the past three years by pledging his stake in the company’s oil and gas operations as collateral.
  • Former Avon (NYSE:AVP) CEO Andrea Jung — Jung stepped down but remains chairman through year-end. Operational problems, a painful miss on a $10 billion deal with beauty products giant Coty and continued profitability problems highlighted by a 70% Q2 decline in earnings were just some of the ugly factors that led to this longtime CEO’s ouster.

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he held a long position in Apple but no other stocks named here.

Get The Slant delivered to your inbox every day!