The readers of our two sister publications, Trader Monthly and Dealmaker, can be found in all corners of the investment world. They are traders and bankers, portfolio advisers and M&A experts, hedge-fund managers and corporate-finance specialists. They represent nearly every age group and job title, from the 22-year-old banking analyst to the hedge-fund quant with a Ph.D. to the battle-scarred founder and president of a private-equity firm.
One thing this group of finance-industry professionals share, though, is their emphasis on quantifiable results. For a CEO to impress them, it’s not enough to be charismatic or visionary or tough (though these qualities assuredly matter). Nor is it enough only to meet the already demanding expectations that accompany the top job at a Fortune 500 firm. You must overperform in measurable ways to continuously generate high earnings and value for shareholders — while at the same time making the difficult long-term decisions that position a company to perform equally well in the future.
That makes this group a compelling audience to ask: Who are the best CEOs of America’s biggest companies? In other words, which leaders do investors trust the most to continue exceeding the ambitious results expected of them? Having divided 100 large-cap firms into 10 economic sectors, we sent out 80,000 surveys, analyzed the findings and then interviewed dozens of the respondents to find out why they voted for certain executives.
Unsurprisingly, the most common reason given was, simply, “performance.” Respondents cited additional reasons specific to each CEO: Apple’s Steve Jobs was commended mostly for his innovation; James Sinegal, of Costco, for his unique, employee-friendly business strategy; and Alan G. Lafley, of Procter & Gamble, for having invigorated the formerly lifeless consumer-goods giant.
This survey, which we plan to publish annually, should be seen as a snapshot whose field of view will change from year to year. New corporate stars will emerge, stalwarts will step down and perceptions — and the business climate — will change. Such fluidity gives the list an added dynamic. But to rise near the top of this list even once indicates a record of excellence that inspires confidence in those who have substantial money riding on the performance of the companies these men lead. So enjoy a candid look at the stars of the corporate world, as determined by those with a front-row seat — and an unblinking critical eye.
Information Technology
No. 1 CEO: Steve Jobs, Apple
The cultural impact of the company Jobs resurrected and has since led is impossible to overestimate.
Top 10: How They Finished
Consumer Discretionary
No. 1 CEO: James Sinegal, Costco
Of the 100 CEOs in our survey, few generated such a warm, seemngly presonal response from the professional investment community as James Sinegal
Top 10: How They Finished
Consumer Staples
No. 1 CEO: Alan G. Lafley, Procter & Gamble
Lafley forged relationships with outside inventors and designers, eschewing the commonly held belief that all P&G products must come from inside the company.
Top 10: How They Finished
Energy
No. 1 CEO: Rex Tillerson, ExxonMobil
Tillerson's stategy: To invest in projects and new markets that the company reasonably expects to be profitable no matter where oil prices. go.
Top 5: How They Finished
Financials
No. 1 CEO: Lloyd Blankfein, Golfman Sachs Group
Blankfein reflects the shift in the securities world from advising to trading and investing in-house money.
Top 10: How They Finished
Telecom
No. 1 CEOs: Edward Whitacre, Randall Stephenson, AT&T
That our respondents voted Whitacre the best CEO in the telecom sector even after he retired in June is a testament to how highly they think of him and to the confidence they have in his successor, Randall Stephenson.
Top 5: How They Finished
Utilities
No. 1 CEO: James Rogers, Duke Energy
Rogers has been in the spotlight for his attempts to close the gap between industry and environmental groups.
Top 10: How They Finished
Materials
No. 1 CEO: Daniel DiMicco, Nucor
Under DiMicco's watch, revenues have soared from $4.6 billion in 2000 to $14.8 billion in 2006, with profits increasing from $311 million to $1.8 billion as of the end of 2006.
Top 10: How They Finished
Health Care
No. 1 CEO: William Weldon, Johnson & Johnson
Since Weldon took over the top spot in 2002, he has earned praise for the conglomerate's steady sales and earnings growth.
Top 10: How They Finished
Industrials
No. 1 CEO: James McNerney, Boeing
For overseeing the aerospace and defense firm's comeback, McNerney edged out former GE colleague Jeffrey Immelt.
Top 10: How They Finished
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.