No. 1:

Edward Whitacre, AT&T

Age: 66
Education: B.S. in industrial engineering from Texas Tech University
Previously: President and COO, Southwestern Bell, from 1988 until appointed mchairman and CEO in 1990

No. 1:

Randall Stephenson, AT&T

Age: 47
Education: B.S. in accounting from Central State University; master’s of accountancy from the University of Oklahoma
Previously: CFO, 2001–2004; COO, 2004–2007

In June, Ed Whitacre stepped down from his role as chairman and CEO of AT&T after more than four decades in telecommunications. He will be remembered primarily as the CEO who made Southwestern Bell, the smallest of the original Baby Bells, into the world’s largest telecommunications firm — one that ultimately subsumed the brand from which it began, AT&T. Recent market cap: $257 billion.

He turned AT&T into what it is today mostly through large acquisitions, which give the company an unmatched scale and breadth of services — including landlines, wireless phone, broadband Internet and television — that it can bundle to customers. SBC acquired AT&T Wireless for $47 billion in 2004 and AT&T Corp. for $22 billion in 2005, taking the AT&T name in the process. The company also acquired BellSouth last December for $86 billion.

That our respondents voted Whitacre the best CEO in the telecom sector even after he retired is a testament to how highly they think of him and to the confidence they have in his successor, Randall Stephenson, who was also listed on ballots. “Size is hugely important in the telecom field,” says Larry Steinberg, founder of the Steinberg Group, an investment-advisory and e-commerce firm. “AT&T has been good about taking risks while hedging its bets, and has made some smart acquisitions.”

Wall Street clearly applauds the acquisition strategy. AT&T’s stock is up about 90 percent for the past two years, compared to about 30 percent for the S&P 500. Those surveyed gave Whitacre credit for everything from resurrecting the original “Ma Bell” (by taking the AT&T name) to the firm’s deal to exclusively service the iPhone.

In Stephenson, AT&T has a natural successor. Having already worked with Whitacre for roughly a decade, he was made CFO in 2001 and COO three years later. As CFO, he reportedly decreased the company’s debt by some $30 billion, helping position the firm for the purchases of AT&T and BellSouth.

Stephenson has some challenges to live up to, with cable companies now offering telephone and Internet services, and AT&T getting into Internet-protocol television through a nascent service called U-verse. It also remains to be seen whether Stephenson will continue to seek large acquisitions or focus more on organic growth. So far, though, our respondents seem to have faith that he’ll continue the legacy.

Executive Fact:
Sure, telecom is a technology business. But while CEO, Whitacre never used e-mail.

A Word on Methodology

We compiled our list of 100 CEOs by starting with several hundred of the largest American corporations in terms of annual revenues. We then divided the list into the 10 economic sectors used by Standard & Poor’s Global Industry Classification Standard, and determined that each should contain a minimum of five companies.

We culled the list to 100 firms after considering a variety of objective factors (revenues, earnings, market cap, returns, sustained excellence) in addition to other, more subjective reasons, and determined the final list by committee.

We then asked our readers to grade each company’s CEO on a scale that correlated to 1 through 6, whereby 1 = below average; 2 = average; 3 = good; 4 = very good; 5 = exceptional; and 6 = the very best. There was also a category for “do not recognize”; we strongly encouraged respondents to rank only those executives they closely track. Whoever received the highest average score in each sector was the winner.

We sent the survey to a proprietary list of 80,000 hedge-fund managers, professional traders, private-equity professionals and investment bankers, asking them to include their age, company and job title. The results are confidential, though we did ask respondents whether they would mind being contacted later for comments about their selections, some of which are printed here.

Furthermore, those surveyed were asked to name the most outstanding CEO in each sector, and why, and to list five retired CEOs they most admired and five new or up-and-coming CEOs to watch.

For executives who have been CEO for fewer than three months prior to the survey, which took place in late September, we listed both the company’s previous and new CEO.

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