Best performing CEO’s in the world

Morten T. Hansen, Herminia Ibarra, and Urs Peyer have written an excellent article in the Jan-Feb 2010 edition of Harvard Business Review.

A lot of people have blamed short-term thinking for causing our current economic troubles, which has set off a debate about what time window we should use to assess a CEO’s performance. This article contains the first ranking that shows which CEOs of large public companies performed best over their entire time in office and the results cover close on 2,000 CEOs worldwide.

It may come as no shock that Steve Jobs of Apple tops the list. However, the ranking does contain a few surprises with some relatively unknown faces at the top. The inverse is also true: Some obvious candidates in terms of reputation don’t make the top 50, or even the top 100 or top 200. In fact, the list overlaps very little with lists of the most-admired or highest-paid CEOs.

Here are some of the headline findings:

- 1,999 CEOs performance was analysed
- The entire group represented 48 nationalities and came from companies based in 33 countries.
- The median age at which these executives had become CEO was 52,
- Only 1.5% were women
- Only 15% of the CEOs worked for companies based in a country that was not their country of origin. It is still not a global labor market for chief executives.
- Leaders had to produce remarkable performance to make the top 50. On average, those CEOs delivered a total shareholder return of 997% (adjusted for exchange-rate effects) during their time in office. That translates into a spectacular annual return of 32%.
- On average the top 50 increased the wealth of their companies’ shareholders by $48.2 billion
- Compared with the average performance of the bottom 50 CEOs who produced a total shareholder return of minus 70%, which corresponds to an annual return of minus 20%.
- On average poor performers presided over a loss of $18.3 billion in shareholder value.
- The #1 CEO on the list, Steve Jobs, delivered a whopping 3,188% industry-adjusted return
- The #2 CEO, Yun Jong-Yong, ran South Korea’s Samsung Electronics from 1996 to 2008.
- Yun is an example of a leader who has stayed out of the limelight. During his tenure he capably transformed Samsung from a maker of memory chips and me-too products into an innovator selling digital products such as leading-edge cell phones. Under Yun shareholder wealth increased by $127 billion, and the total industry-adjusted return was 1,458%.
- Of Barron’s 2009 list of the 30 most respected chief executives in the world, which a group of editors had selected after speaking with investors, analysts, and executives only five executives appear in both the Barron’s list and HBR’s top 30: Steve Jobs of Apple, John Chambers of Cisco, Jeff Bezos of Amazon, Hugh Grant of Monsanto, and Terry Leahy of Tesco.
- Several CEOs that were “most respected” according to Barron’s are nowhere near HBR’s top 50 (or even our top 200)—namely, Jamie Dimon of JPMorgan Chase, Satoru Iwata of Nintendo, Sam Palmisano of IBM, and Rex Tillerson of Exxon Mobil.
- Study showed little overlap between the highest-paid chief executives in America and HBR top 50.
– Performance is geographically widespread; no one country dominates the list.
- Some clustering of performance by industry, with industries are overrepresented in the top 200—notably, energy, telecommunications, health-care equipment and providers, and retailing. BUT revealed that some low-growth industries, such as retailing, are well represented, too. This shows that CEOs can attain exceptional performance even if they’re not in a booming industry.
- Insiders tend to do better. Internal promotions on average, ranked 57 places higher than outsiders
- MBAs tended to rank better than the non-MBAs.

The top 50 list shows that no country or industry has a corner on performance. But taking a longer perspective did bring to light a number of “hidden gems”—quiet CEOs who delivered outstanding results year in and year out, away from the glare of the cover stories and business school case studies. Their success makes a persuasive argument for a new approach to evaluating CEOs. Only by analyzing performance over their tenure and beyond can we begin to understand the nature of great leadership.

You can read the full article here

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