At the back-end of last year, Sydney Finkelstein—the Steven Roth Professor of Management, faculty director of the Center for Leadership, and associate dean for Executive Education at the Tuck School of Business at Dartmouth—announced his picks for the best and worst CEOs of 2014.
Over the past 20 years Finkelstein has studied business failures and the career-ending mistakes of leaders. An expert on leadership, he authored the book, "Think Again: Why Good Leaders Make Bad Decisions and How to Keep it from Happening to You," and since 2010, he has shared with the public the CEOs he believes have made the biggest gaffes, screw-ups and blunders - and the CEOs who are leading companies with significant financial struggles.
“People often say they learn from their mistakes,” he says. “Drawing attention to prominent CEOs who have stumbled is another way to learn, for all of us, about what works and doesn’t when it comes to leadership.”
Last year Finkelstein started recognizing CEOs he deems the best based on company performance and the link between that company’s success and the CEO’s strategy and leadership – to publish alongside his ‘worst’ CEOs list. Both lists follow here.
Syd’s Worst CEOs of 2014
#5 Dick Costolo, CEO, Twitter: With shares at Twitter dropping by 42 percent and monthly active users (MAU) slowing, Finkelstein says Twitter is not fulfilling its huge potential, growing more slowly and with more question marks under CEO Costolo.
#4 Eddie Lampert, CEO, Sears Holdings: Sears continues to book half-billion-dollar quarterly losses. Finkelstein cites Lampert’s failed strategy, arrogant leadership, and Sears’ rapidly dropping stock price as reasons for his place on this year’s worst CEOs list. This is the second consecutive year Lampert has been named one of Finkelstein’s worst CEOs.
#3 Philip Clarke, CEO, Tesco (with honourable mention to his predecessor as CEO, Terry Leahy): After what Finkelstein calls a disastrous year for Tesco, Clarke left the company on July 21, 2014. The company’s U.S. venture, Fresh & Easy, was long-time CEO Terry Leahy’s mistake, says Finkelstein, costing the company $2.7 billion. However, Clarke took one year to close a business that continued to haemorrhage money, he says.
#2 Dov Charney, CEO, American Apparel: In addition to several company scandals, alleged financial misconduct, and numerous lawsuits filed against American Apparel and Charney, Finkelstein also cites the company’s stock price, which is down 80 percent in five years, as one of several reasons Charney is the #2 worst CEO of 2014.
#1 Ricardo Espírito Santo Silva Salgado: CEO, Banco Espírito Santo (BES): Finkelstein’s worst CEO of the year goes to the head of the Salgado family of Portugal—the CEO who controlled the second-biggest bank in Portugal, and brought it to bankruptcy. During the first half of 2014, BES saw a loss of $4.5 billion. Finkelstein also cites allegations of fraud, complicated intertwining ownership stakes among family-controlled enterprises, and the fact that Portugal was forced to bail out BES with $6 billion as reasons why Salgado is the #1 worst CEO of 2014.
Syd’s Best CEOs of 2014
#5 Andrew Wilson, CEO, Electronic Arts: In 2012 and 2013, Electronic Arts was named the “Worst Company in America” by Consumerist. Today, its stock price is up 96 percent, which Finkelstein calls “incredible.”
#4 John Martin, CEO, Gilead Sciences: Finkelstein says Martin “successfully brought Sovaldi to market and embraced a pricing strategy that delivered significant value to investors.”
#3 Jack Ma, CEO, Alibaba: After the largest IPO in history, which raised $25 billion in September, Alibaba has succeeded in growing its stock price an additional 12 percent since its IPO. Finkelstein credits Jack Ma with Alibaba’s significant growth—its total revenue grew by 53.7 percent to $2.74 billion in 2014 with mobile revenue growing by more than 1,000 percent.
#2 Kevin Plank, CEO, Under Armour: Under Armour’s stock price rose 58 percent, after an incredible 80-percent gain last year. Under Armour has now had four straight quarters of over 30-percent growth and 18 straight quarters of over 20-percent growth. “Nike,” says Finkelstein, “is on alert.”
#1 Elon Musk, CEO, Tesla and CEO, SpaceX: “2014 was an impressive year for Elon Musk as he led two companies on big growth trajectories,” says Finkelstein. “In addition to Tesla’s stock price increasing 38 percent year to date after rising 344 percent in 2013, SpaceX made a number of successful trips to space and won important government contracts.”
Note: The opinions expressed by Sydney Finkelstein are his own and do not necessarily represent the opinion of the Tuck School of Business.