The Worst CEOs Of 2012
Sydney Finkelstein, professor at Dartmouth College’s Tuck School of Business, has developed a list of the worst chief executives of 2012. Finkelstein authored 11 books including such titles as Why Smart Executives Fail and Think Again: Why Good Leaders Make Bad Decisions, so it’s safe to say he knows a few things about business success and failure.
The CEOs of Netflix, Research in Motion, and Hewlett-Packard were lucky enough to make the 2011 list. Here’s the 2012 list in its oh so shameful light:
1. Brian Dunn, previous CEO of Best Buy — resigned following allegations that he had an inappropriate relationship with a much younger subordinate. But he isn’t on the list because of that. It was a declining stock price, same-store sales, loss of market share, and share buybacks that cost the company $6.4 billion that landed him here.
Here’s what Finkelstein had to say about Dunn in an interview with NPR: “Well, Brian Dunn has been at the helm of the company for several years and Best Buy has been in a freefall. The stock is way down, their cash is down, their same-store sales are down. And the problem is that people walk into Best Buy, look at the products, look at the TVs and take a few notes and then go home and go on Amazon and buy it at a cheaper price. And the solution that Brian Dunn has tried to come up with has really not worked. He’s focused on trying to sell more expensive products, he hasn’t tried to fix customer service and he certainly hasn’t tried to fix the online part of the business. And unfortunately, to top it all off, he got himself into a bit of trouble in an alleged affair with a 29-year-old subordinate, and that probably was the final straw that broke the camel’s back.“
2. Aubrey McClendon, CEO of Chesapeake Energy, is on the list because of undisclosed loans against the company — he borrowed $500 million for personal use from EIG Global Energy Partners and according to Reuters that’s less than half of what he borrowed. He also ran a secret $200 million hedge fund that traded oil and gas — a huge conflict of interest — and used the company jet for personal travel.
Finkelstein’s comment to NPR regarding McClendon: “He’s the CEO of Chesapeake Energy. He’s one of the real champions of hydraulic fracking that has revolutionized the national gas industry in America. He was running a hedge fund, a private hedge fund, not a corporate hedge fund, trading in oil and gas at the same time that he was CEO of the company. I mean, it’s an obvious conflict of interest. When he needed to raise some capital himself for his own personal financial dealings, he actually borrowed $500 million from EIG Global Energy Partners, which is a company that is a major financier for Chesapeake itself. Clearly, a significant conflict of interest.“
3. Andrea Jung, who stepped down as CEO of Avon in April, has also landed herself here. Jung couldn’t fix operational problems, didn’t groom a successor, and declined a $10.7 billion offer from rival beauty-care Coty. Under Jung watch the company’s market share has fallen nearly $15 billion and Avon has spent almost $300 million in legal expenses due to allegations that it violated the Foreign Corrupt Practices Act — barring bribery of foreign officials.
Finkelstein’s comment to NPR regarding Jung: “At one time the market value of Avon was some $21 billion and today it’s around $6 billion, so what was going on at Avon has been going on for some time. Andrea Jung’s strongest suit, I think, is in marketing and branding and she’s very, very talented at that. But when you start to think about what are the challenges for Avon as they expand into China, where it’s a big business, you really need much stronger execution skills, operational skills, and that’s not something that was always her strongest suit. And that might be one of the reasons why this incredible bribery scandal has erupted, where the company is being investigated by the Justice Department, by the SEC for possible violations of the Foreign Corrupt Practices Act. And Avon has already spent several hundred million dollars in investigating and dealing with that and I think there’s still another shoe to drop on it.“
4. Mark Pincus, CEO of Zynga, the mobile gaming company responsible for Farmville, made the list because of what Finkelstein calls rookie mistakes. The company’s stock is down nearly 75 percent this year, and top executives have been jumping ship. He showed an extreme lack of faith in his company by unloading 16 million shares following the end of the company’s IPO lockup.
Finkelstein’s comment to NPR regarding Pincus: “And so while they have a lot of users still today at Zynga that are using Farmville, fewer and fewer people are paying. There’s been a virtual revolving door in the executive suite, one senior executive after another has left. Zynga has been dependent on Facebook for some 90 percent of their revenues which, you know, you never want to get in that position either. Mark Pincus sold a tremendous amount of his stock right after the IPO in a way that made a lot of people concerned about what does he really think about the company.“
I want more stuff like this!