It appears that 2011 will be remembered as the year of Europe and the year that the U.S. was given its first downgrade in its history. Overall, there isn't much good that 2011 will be remembered for, however the economy has steadily improved and the majority of large traded companies are posting great earnings with more cash than ever before. For the most part, if we looked at every company in the Dow Jones we would find that just about all of them recorded better earnings and higher revenue in 2011 than in 2010. The markets, however, have been rough and have only gained 2.5% year-to-date. Therefore we can conclude that 2011 has been a decent year for large companies but a rough year for the markets, especially financials, basic materials, and energy. Yet some stocks have traded higher despite adversity, while others not so much. Below I have listed 7 CEOs that have performed the worst over the last year and have contributed the most to his or her company's demise.
#7 Ralph Bartel Travelzoo (TZOO)
Ralph Bartel isn't the CEO of Travelzoo, instead he is the founder of Travelzoo and was previously the chairman of the board before limiting his duties and now serving as a director. By all accounts it's been a great year for Travelzoo, with the exception of its stock price. The company's increased its revenue over the last twelve months by 26% year-over-year including a near 40% gain during the last quarter, compared to the same quarter in 2010. The company has also improved its margins and increased earnings 62% year-over-year by expanding into new regions and new areas throughout the globe. My reasons for placing Ralph Bartel on this list as #7 is the company's stock performance which I feel he played a large role in its performance.
Travelzoo was one of the best performing stocks of 2010 and then returned an additional 140% during the first four months of 2011. However, the stock has since declined by more than 70% from its highs in late April. When the stock was trading near its highs, CEO Chris Loughlin went on Mad Money and talked about how fast the company was growing. The only problem was that when company executives were promoting its performance, founder Ralph Bartel was selling nearly 2.5 million shares for an average price of $76.55. In addition, the company may have very well saved investors a large amount of loss if it would've give better guidance into future earnings. The company gives very limited guidance but if it would've given better guidance maybe investors would have been prepared for the failed advertising campaign in the second quarter that resulted in its largest loss to date. Therefore, because of limited guidance; strong promotion; a 70% loss since April; and the founder and director taking profits and pushing the stock lower I consider Bartel to be the 7th worst CEO/director of 2011.
#6 Reed Hastings Netflix (NFLX)
Reed Hastings is widely considered one of the brightest minds in technology. His transcendent company Netflix changed the way we view television and entertainment with a cheap and fast alternative to traditional TV. However, his legacy has been tarnished as of late with NFLX declining by more than 75% over the last five months. With that being said, I don't consider Reed Hastings to be a "bad CEO" but he definitely made one of the worst executive decisions of 2011 when he decided to raise prices. The truth is that prices had to be raised in order for NFLX to survive and continue to grow. However, his indecisiveness in a market that's already skeptical by nature proved to be disastrous to his company's worth, which is now valued at less than $4 billion. Some may consider Hastings to be the worst CEO of 2011; but there is still time for him to salvage his company if he can continue to innovate and prove that NFLX can remain a leader in an industry with competition that continues to increase. Therefore, 2012 will be the year of judgment for Netflix and Reed Hastings because at this point his reputation and performance are based on emotion, we still need to see how the increased prices will play out long-term.
#5 Thomas Johnson Aeropostale (ARO)
Thomas Johnson has been the CEO of Aeropostale for almost exactly one year and since his term began the stock has declined by 34%. If you compare the last twelve months of earnings to 2010 you would see that revenue is nearly the same. However, the company's margins and earnings have drastically declined, by nearly 60% during the company's most recent quarter. Johnson's been unable to capitalize in a strong retail industry and the company's lost much of its edge from being a must-have brand among specialty retailers. At this point I don't see the company making progress anytime soon and it appears that consumers are no longer willing to pay premium prices for the Aeropostale name. Therefore the company, and its CEO, must make changes to correct its margin issues, which I don't see happening anytime in the near future.
#4 Leo Apotheker Hewlett-Packard (HPQ)
Leo Apotheker is no longer the CEO at Hewlett-Packard -- in fact he was the CEO for less than one year -- however, it took him less than one year to drive its stock down by more than 50%. This pick is arguably number 1 and if he was still acting as CEO I believe he would be number 1 on my list. During Apotheker's term he did just about everything he could to negatively affect the stock. And of course it wasn't intentional but I fail to see a strategic plan on behalf of Apotheker to grow the company when he was the acting CEO. Apotheker proposed discontinuing its webOS device business, which included mobile phones and tablets, and possibly selling its consumer PC business. These decisions were questionable at best, as it seemed Apotheker was trying to make changes in the company's most promising segments. The company is still trying to recover from the Apotheker era and continues to lack direction. The company's margins, revenue, and earnings have all declined over the last year while its debt has risen. Yet despite all of the company's current problems and the questionable decisions by its former CEO, I am unable to put all the blame on Apotheker, because after all, the company has switched CEOs quite often. However, the cost of the short-lived Apotheker era is yet to be seen, but one number we do know is his $13 million in compensation; a $7.2 million severance package; $3.56 million worth of shares; and a performance bonus of $2.4 million that were all paid to the former CEO for his services, or lack thereof.
#3 Michael Lazaridis & James Balsillie Research In Motion (RIMM)
In 2007 Research in Motion was one of the fastest growing stocks with its must-have Blackberry products. However, the tech giant has lost most of its presence and in the world of technology, a company must continue to innovate in order to stay alive. The company's stock is currently trading at 52 week lows with a 75% loss year-to-date. For the first year in a decade, RIMM could post lower revenue year-over-year, and is on pace to post significantly less earnings with a 58% loss year-over-year during its last quarter. The reason I believe that Lazaridis and Balsillie are number 4 on this list is because they have the means to have prevented this downtrend. The company has over $1 billion in cash and no debt on its balance sheet, which gives it the flexibility to innovate and create products that are one step ahead of the competition. However, the company's CEOs have chosen to follow a different route, and continue to release new Blackberry products despite the demand not being present. These two CEOs will probably remain on this list until the company creates a new brand and innovates its products with a new look and better technology. The money and financing are available but I'm not sure the desire to change is present.
#2 Brian Moynihan Bank of America (BAC)
Bank of America is perhaps the most hated company in America, and for good reason. The company took billions in bailout money during the recession but has yet to make a contributing effort to strengthen the economy. Instead, BofA and CEO Brian Moynihan have chosen the conservative route, which includes: closing hundreds of branches; firing as many as 30,000 employees; and implementing a $5 debit card fee to its customers. Although the debit card fees have been removed, it's the concept of creating such a charge while the company records a $6.2 billion quarter that remains problematic. The stock has been one of the worst performers of 2011 with a 60% loss and has lost nearly $90 billion in valuation. Therefore, it's safe to say that neither customers, previous employees who have been fired, nor investors are happy with BofA or its CEO Brian Moynihan. The company has been under heavy scrutiny during the last year with countless lawsuits and its seemingly desperate CEO hasn't reassured investors either. Unless major changes take place, this could be a short-lived tenure for Moynihan. I just fear the changes won't be instrumental to the economy, and his legacy could become the CEO who fired 100,000 employees and didn't make any changes to help business owners, families, or employees.
#1 Jon Corzine MF Global (MFGLQ.PK)
How could there be a worse CEO than Jon Corzine for 2011? By the start of 2012, Corzine will either be remembered for his disconnect to MF Global or his lack of accountability for the situation that his firm caused to thousands of people and small business owners. Bank of America may be the most hated company in America but Corzine may be the most hated man of the moment. The former Goldman Sachs (GS) employee and New Jersey senator is now having to answer tough questions regarding the whereabouts of investors' money whose accounts are now frozen. Corzine is not only number 1 on this list because of his actions as CEO of MF Global, but also because of his actions today and his failure to take responsibility for the lost money. It is estimated that Corzine made $400 million during the IPO of Goldman Sachs in 1999, and spent more than $60 million during his campaign for the senate, the most in history, yet he's unresponsive to questions regarding the families who are now suffering for his negligence. During his hearing on Capitol Hill I loved the questions about him not using some of his personal fortune to help in getting MF Global's customers paid. I believe this further adds to the hate of Corzine, as a man who spent $60 million on a campaign, but won't help in paying some of the money that is now magically "lost."
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.