As promised, this is the second installment of "The Worst CEOs of 2011," whereby I've weeded out more than a handful of bad CEOs to come up with the absolute worst 10 of the bunch. On Friday, I walked you through offenders No. 6 through 10. Today, we're going to look at the cream of the crop and see why I think these five CEOs truly are the worst of the worst.

Here they are, in reverse order:

5. Leo Apotheker, Hewlett-Packard (NYS: HPQ)
There's a reason that Hewlett-Packard jettisoned Leo Apotheker in September in favor of former eBay CEO Meg Whitman: The man couldn't make a correct decision if the viability of his company depended on it.

Since Apotheker took over the helm in November 2010, HP's stock lost nearly half of its value. His appointment as head of HP made little sense to many last year, especially considering that his controversial attempt to raise prices at software firm SAP (NYS: SAP) seemed to be the primary reason he resigned from that job after a short stint.

While leading HP, Apotheker attempted to take the company in four different directions at once, ripping apart the once-dominant PC producer. In August, Apotheker orchestrated what would turn out to be his death knell, a $10.3 billion purchase of search software firm Autonomy. Just about everybody but Apotheker believed he overpaid for the company. In response, he suggested that HP spin off its once-dominant personal computing division. Needless to say, this didn't go over well with investors, and for the second time in as many years, Apotheker stepped down after a short stint as CEO.

But don't feel sorry for Leo -- he'll be taking home a severance package valued at an estimated $25.2 million in cash and stock options. The people I really feel sorry for are the shareholders who put up with this.

4. Jim Balsillie & Mike Lazaridis, Research In Motion (NAS: RIMM)
Just because RIM employs a co-CEO structure doesn't mean these two get any less of the blame than a single CEO would.

To say that Apple (NAS: AAPL) is eating Research In Motion for lunch might be the understatement of the decade. The ease of use of the iPhone has radically transformed the smartphone landscape and left users fleeing the BlackBerry en masse for the much more user-friendly iPhone or even Google's Droid-based platforms. RIM has not only failed to deliver on the unrealistically high expectations set earlier in the year by its CEOs, but it also has apparently completely lost its ability to innovate, which is what made the company great in the first place. And, whether they like it or not, the co-CEOs are the ones who will take the blame.

RIM's PlayBook tablet has been the butt of many jokes on Wall Street. It has failed to live up to expectations, and despite my stubborn optimism about RIM's ability to hang on to its enterprise software business, even I admit that the consumer side of sales is a complete and utter disaster. RIM is losing market share to all of its major competitors and this trend shows little signs of slowing. Recent BlackBerry outages only add to my outrage.

Need another reason not to like this duo? How about the fact that each brought in more than $5 million in compensation in 2011 while also laying off 11% of RIM's workforce earlier this year? With the stock down more than 70% year to date, I'm betting that shareholders' patience with the dual-CEO structure is beginning to wear thin.

3. Reed Hastings, Netflix (NAS: NFLX)
For years we've been hearing about the potential flaws built into Netflix's business model: that media costs would rise, that Amazon.com would eventually eat it alive, or that CDs would eventually go the way of the dodo bird. Luckily, none of those mattered, because CEO Reed Hastings decided he would do what any good CEO would do following years of rapid growth: cannibalize the hell out of his company.

Reed Hastings may not even have made this list had he made just one faux pas during the year. I probably wouldn't have put him into the top five had it only been two. But the man made three egregious errors that are simply unforgivable of a CEO.

First, he attempted to raise prices by as much as 60% in July without actually adding any value for users. News of these price increases infuriated subscribers and marked the first time in company history that subscribership fell. Second, and perhaps the wackiest idea of the bunch, Hastings aimed to split the company's DVD division from its streaming segment and give birth to the Wall Street mockery of all mockeries, Qwikster. The idea lasted about six weeks before consumer backlash forced Hastings to back away. Finally, with ample cash on hand, Hastings took to the open market to raise even more by offering 2.86 million shares at a discounted price. Not only did this move seem foolish (with a small "f"), but it looked ridiculous following the 900,000 shares Netflix had repurchased so far this year.

I'm sorry, but three strikes and you're out, Mr. Hastings.

2. Greg Divis, KV Pharmaceutical (NYS: KV.A)
If you were compelled enough to write a book about various ways to destroy a company's image in the public eye, then I'd point you to Greg Divis, CEO of KV Pharmaceutical.

Earlier this year, if you were a shareholder in KV Pharmaceutical, you may have actually thought Greg Divis looked like a candidate for CEO of the year. The stock rallied more than 1,000% on FDA approval of Makena, an injectable form of the hormone progesterone used to prevent pre-term birth. But shortly after obtaining FDA approval, this titanic stock hit an iceberg of astronomical proportions.

The company priced its newly approved drug at a jaw-dropping $1,500 per treatment. This was unheard of, considering that doctors had previously used compounding pharmacies prior to Makena to achieve the same result for $20 or less. If that wasn't enough of a slap in the face, KV threatened to sic its lawyers on any doctors who continued to use the cheaper versions for treatment, claiming that Makena's orphan drug status made it the exclusive therapy. To make a long story short, KV ticked off everyone, from expecting mothers to advocacy organizations to even Congress. The debacle resulted in the FDA ruling against KV's Makena exclusivity and the company dropping the price of Makena dramatically.

So finally, after putting millions into developing Makena, it now appears KV may not be able to sell it at a high enough price to make a positive return on investment. To top that off, most of the world now sees KV as a heartless company. Good job, Mr. Divis!

And finally, numero uno...

1. Jon Corzine, MF Global (OTC: MFGLQ.PK)
Seriously, how could anyone else other than Jon Corzine fill the role of the worst CEO of 2011? And it isn't as if he was the worst CEO by a small margin -- he practically deserves his very own category.

In what is still being investigated as the disaster of 2011, MF Global and Jon Corzine made large bets on European debt -- a big bet similar to the rogue-trader incident that Corzine referred to in early 2010 as a reason to change the firm's culture. Lehman Brothers, the now-defunct investment bank that went belly-up during the credit crisis because it was levered to the brim at 30-to-1, looks like child's play next to the magnitude of leverage Jon Corzine had at MF Global. Some estimates put MF Global's leverage ratio at 80-to-1!

But bankrupting MF Global wasn't enough. Under Corzine's watch, it now appears that the company took it one step further by using customer funds in a last-ditch effort to prop up its highly levered business. I firmly believe that everyone is innocent until proven guilty in a court of law, but with the latest estimates of $1.2 billion in customer funds still unaccounted for, I'm starting to think it might be wise for Mr. Corzine to begin looking for a tailor-made orange jumpsuit.

Foolish roundup
Well, there you have it -- my picks for the 10 worst CEOs of 2011. Which CEO sticks out to you as the worst? Let us know in the comments section below.

Also, I invite you to download your copy of our free report, "5 Stocks The Motley Fool Owns -- And You Should Too," which highlights five stocks handpicked by our top analysts, who have management teams you can trust.

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He doesn't expect to make many friends with this two-part article. You can follow him on CAPS under the screen name TMFUltraLong , track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Google and Apple. Motley Fool newsletter services have recommended buying shares of Google, Amazon.com, Netflix, eBay, and Apple, as well as creating a bull call spread position in Apple and writing puts on eBay. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that's always looking out for your best interests.

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I hope Dan Hesse makes it on this year's list!

October 04 2012 at 8:32 PM Report abuse rate up rate down Reply