Our Seventh Nominee for Worst CEO of the Year: Bob Diamond
Nov 2nd 2012 2:54PM
Updated Nov 2nd 2012 3:02PM
My praise and contempt for CEO actions are pretty well known around these parts. I've been running a weekly series looking at CEO gaffes for nearly 10 months now (with seemingly endless material, may I add), and recently I've begun highlighting incredible CEOs who deserve a pat on the back. Last year, I even listed my 10 best CEOs of the year and my 10 worst CEOs of the year.
However, this year, we're changing things up a bit and putting the ball in your court! This year, The Motley Fool community is going to decide who the best CEO of the year is, and which CEO should be banished to a distant island.
Each week over the next two weeks, I'm going to highlight one CEO who's worthy of being called the best CEO of 2012, as well as a CEO who I think could easily be called the worst. In total, you and your community members will have eight great CEOs and eight not-so-great ones to choose from when voting commences in November. For reference, here is last week's worst CEO nominee.
In the meantime, I encourage you to get the discussion started on the CEO of the Week board. Although I do have all the nominees handpicked already, these selections are by no means set in stone. If you can offer me your top picks for best and worst CEO, as well as your reasoning, you may just find your nomination in the spotlight.
Without further ado, I give you the seventh nominee for worst CEO of the year: Bob Diamond, former CEO of Barclays (NYS: BCS) .
Why Bob Diamond?
- LIBOR-fixing scandal: To be fair, Barclays isn't the only company implicated in fixing the London Interbank overnight lending rate to their own benefit, but it's often seen as the poster child of excess since it disclosed its role in fixing LIBOR as far back as 2005. LIBOR is crucial in determining rates for north of $10 trillion worth of mortgage, credit, and auto loans, and potentially could have been costly for consumers if those rates weren't reflecting true market valuations. As part of the scandal, both Diamond and Barclay's chief operating officer, Jerry del Missier, resigned, and Barclays has paid a nasty $453 million fine levied against it by U.S. and British regulators. Although Diamond wasn't CEO during the scandal (he was a Barclays board member), he -- fairly or unfairly -- was the face of it as it broke under his watch. He also heaped some of the responsibility on his own shoulders in a letter to Barclay's employees, writing, "I am disappointed because many of these behaviours happened on my watch."
- Terrible stock performance versus the market: Ben Graham once called the stock market a "voting machine" over the short term. If we use this voting machine as a gauge of investors' view of Diamond, the result is a resounding thumbs down. Between when Diamond became CEO and the day he resigned, Barclays share price has declined by 34%. Since he joined Barclays' board, its share price is down more than 50%! What's worse is that Barclays' stock drastically underperformed the broad-based S&P 500's (INDEX: ^GSPC) positive return of 12.2% and the Financial Select Sector SPDR's advance of 2.6% (when adjusted for dividends). I guess shareholders should be thrilled Bob Diamond resigned.
- Exorbitant pay package: One thing was for sure; whether Bob Diamond was "just" a board member or was running Barclays, he was bound to take home a healthy pay package. Since 2005, Barclays' former CEO took home -- and sit down for this -- $190 million, and is currently still lobbying Barclays to receive what he feels is an entitled $29 million in additional compensation in the form of options and long-term incentives promised to him via his contract. Would you give Bob Diamond an additional $29 million given Barclays' poor stock performance? I think not!
- Out of touch with reality: Perhaps nothing stands out as being more out of touch with reality than a memo sent to Barclays' employees outlining plans to turn Barclays around. It appears to me that this memo backfired. My guess is that Diamond's multiple attempts to lessen his involvement in the LIBOR-scandal only fueled further political backlash that eventually led to more in-depth investigations into Barclays actions over the past few years. In addition, I also think the memo's writer comes across as someone who wants to distance himself from the LIBOR scandal and who doesn't understand that his employees aren't disappointed with media reports about the company, but with Barclays' management's actions over the preceding years.
Is Bob Diamond the worst CEO of the year? That's going to be up to you and the rest of The Motley Fool community to decide. In the meantime, come back on Tuesdays and Thursdays for the next two weeks for the latest nominations, and be sure to hit up the CEO of the Week board to voice your opinion to the community.
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The article Our Seventh Nominee for Worst CEO of the Year: Bob Diamond originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He loves giving credit when credit is due. 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 JPMorgan Chase. 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.
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