My Top 10 CEOs of 2011: Part 2
Dec 28th 2011 2:31PM
Updated Dec 28th 2011 2:38PM
In a year filled with corporate scandals and wild price swings for many stocks, finding CEOs who protected shareholders' interests was not easy. These five top CEOs, however, went above and beyond the call of duty for investors this year and can undoubtedly be called the best of the best.
Here they are, in reverse order:
5. Jeff Bezos, Amazon.com (NAS: AMZN)
Out of my 10 choices for best CEO in 2011, Jeff Bezos is the one I'll probably take the most heat about. For starters, the stock is basically unchanged after giving up all of its gains earlier in the year, and Amazon actually guided lower in its most recent earnings report. But sometimes you don't have to do much in order to effect great change on your surroundings.
2011 was the year that Amazon asserted its dominance as the most prominent retailer, simply crushing its competition. This was a year in which Barnes & Noble struggled mightily and Borders bit the dust. Even more impressive, Amazon's sheer presence in streaming video caused the Netflix (NAS: NFLX) train to derail in a most calamitous way, clearing a path for Amazon to continue to steal market share. Amazon's sheer size and $6.3 billion in cash represents a daunting challenge for cash-strapped Netflix when it attempts to renegotiate some of its content contracts. So before you send Jeff Bezos to the guillotine, consider what his company's sheer presence has done to its competitors.
Also important were the little decisions made by Bezos, including dropping the price of Amazon's Kindle to $79 and introducing the Kindle Fire at $199. At those prices, even if the company loses money on the physical sale of the Kindle, it stands to make a fortune on everything users purchase on it. There's simply no way Barnes & Noble's Nook or any other competitor can match Amazon's price for any length of time. The new Fire tablet looks like an early-stage winner, but I'd rather let the company's fourth-quarter results do the talking. By making small but important moves, Jeff Bezos has once again put his company in position to grow at an incredible pace, and it's for that reason he deserves to be in the top five CEOs of 2011.
4. Eric Wiseman, VF (NYS: VFC)
There aren't many retailers that can brag about having as good a year as VF has had. The company, which counts North Face, Wrangler, and Vans among its many brands, truly solidified its portfolio earlier this year by purchasing Timberland and gaining access to its rugged brand name. VF has quickly entrenched itself in all facets of retail, from casual apparel to rugged outerwear, and strength in its quarterly results is reflective of the company's impressive diversification.
For the third quarter, VF reported record quarterly earnings and a 23% jump in revenue. Think that was all Timberland? Think again, because every business segment showed strong growth, including an 8% rise in jeanswear sales. This figure may not sound like much, but when nearly every teen retailer is begging for forgiveness because of rising cotton prices while VF goes out, executes, and crushes estimates quarter after quarter, it shows just how well-run a company you're dealing with.
Don't think the stock's roughly 50% gain this year or the increased EPS guidance was enough to net Eric Wiseman a spot in the top five this year? Well, you'd be right. It's actually the 14% increase in the company's dividend -- the 39th consecutive year VF has increased its payout -- that was the tipping point. VF's quarterly dividend has risen by a staggering 148% since March 2006, and I don't see any signs of its earnings momentum slowing. Mr. Wiseman has done an incredible job with VF and he deserves a solid pat on the back.
3. P. Schaefer Price, Pharmasset (NAS: VRUS)
If they were giving out awards for salesman of the year, Mr. Price would have won the award blindfolded and with one hand tied behind his back. Announced in late November as one of the largest buyouts of the year, Pharmasset agreed to be acquired by Gilead Sciences (NAS: GILD) for the hefty sum of $11 billion. This figure represented a 59% premium to Pharmasset's previous all-time high and (get this) a 1,095% increase over the stock's price just two years ago.
Aside from the sheer 468% gain in the stock price this year alone, the truly remarkable aspect of this $11 billion deal is that Pharmasset doesn't even have an FDA-approved drug on the market yet! In fact, Pharmasset's leading drug candidate PSI-7977 isn't even out of phase 2 clinical trials. Don't get me wrong -- the data has so far suggested that PSI-7977 could be a significant improvement over the drugs already approved by the FDA to treat hepatitis C. But it's an enormous gamble for Gilead to take, especially considering that no drug is ever guaranteed approval by the FDA.
Either way you look at it, Mr. Price was made an offer that he simply couldn't pass up and did right by his shareholders in netting them an incredible gain. Although I was brutally wrong on my own personal call to short Pharmasset, I have to give Mr. Price the kudos that he deserves.
2. Patrick Doyle, Domino's Pizza (NYS: DPZ)
Normally when a company's CEO blatantly comes out and admits that its product is terrible and will do everything possible to change it, that company gets a new CEO pretty quick. That wasn't the case with Patrick Doyle, CEO of Domino's, who walked a very fine line between being apologetic and aggressive this year. Doing something that has rarely worked in the past, Mr. Doyle publicly admitted his product failed to live up to consumer expectations and promised to do something about it. Surprisingly, it worked.
For the year, Domino's stock price has more than doubled, and the company has easily surpassed Wall Street's earnings estimates in three straight quarters. Part of this can be attributed to a sizable drop in cheese prices, which make up 30% to 40% of the company's food costs.
However, the majority of Domino's momentum can be attributed to its high levels of perceived transparency. By listening to its customers and being open with its marketing campaign, the company has been able to sway a very disloyal customer base into becoming rather loyal, further boosting its bottom line.
In its most recent quarter, Domino's highlighted its 71st consecutive quarter of increasing international sales and a 3% domestic same-store sales increase. Also, the company continues to address its debt situation, further reducing its borrowings down to $1.45 billion. Despite lacking a dividend, Domino's has all of the ingredients needed to propel Patrick Doyle to the No. 2 spot on this year's list of the best CEOs.
1. Ajay Banga, MasterCard (NYS: MA)
Let me guess your reaction: either "Huh?" or "Who?" Although Mr. Banga is relatively new to the job, leading MasterCard since only July 2010, he has been nothing short of remarkable.
This year could be described as nothing short of catastrophic for nearly every company in the finance sector. European banks are teetering, U.S. banks are struggling to raise cash, and Chinese investors are running for the hills. And do you know what MasterCard did? It not only crushed Wall Street's consensus estimates in every quarter this year but also logged a ridiculous 67% stock gain while nearly every other financial stock plummeted.
Even more remarkably, MasterCard's record quarters came with the help of Europe! Take a deep breath and follow with me now. In the third quarter, MasterCard reported a huge 27% increase in revenue on an 18% jump in gross dollar volume and a 17% rise in purchase volume. Growth is coming from all regions, and the company's operating margin is tipping the scales at 54.6% so far this year -- its highest on record.
The best part about the MasterCard growth story is it's still just getting started. According to MasterCard CFO Martina Hund-Mejean, 85% of all transactions worldwide are still done in cash, leaving a huge opportunity yet to be filled for MasterCard's debit and credit services.
Among the accomplishments of the 10 CEOs I've looked at were some amazing turnaround stories, big increases in some already healthy dividends, and strong execution of business plans with amazing precision. But none of them trounced the market and their sector with such impressive results as did MasterCard in 2011. My hat's off to you, Mr. Banga, for a job well done.
There you go, folks -- proof that not every CEO is your enemy. These 10 CEOs proved to be invaluable assets to their respective companies in 2011 and should continue to be a pillar of confidence moving forward. Which CEO stands out to you as the best of 2011? Share your thoughts in the comments section below.
Also, if you need one more idea for a strong company, I invite you to download your copy of our latest free report, "The Motley Fool's Top Stock for 2012." Inside, you'll find a company that's poised to lead its industry going forward.
At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He loves a good pat on the back. 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 MasterCard, Domino's Pizza, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Gilead Sciences, Netflix, and Amazon.com. 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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