Worst CEOs of 2013

By DAVID MOON, Moon Capital Management, LLC
December 29, 2013

As 2013 draws to a close, so does another year of watching executives destroy companies and shareholder value. Here are my picks for the worst CEOs of 2013.

Thorsten Heins' time as CEO at Blackberry clearly began with the company already in crisis mode. The business needed a massive overhaul.

Heins surprised everyone, including my then 12-year-old son, with his first statements as chief executive: the company needed no major changes.

Less than two years later, Blackberry had fired thousands of employees and was losing almost a billion dollars a quarter. The stock price had declined 60 percent.

Heins was fired in November.

Nokia CEO Stephen Elop lasted longer than Blackberry's Heins: by a whopping 14 months. Nokia, once positioned to be what Samsung eventually became, seems instead destined to follow in Blackberry's footsteps.

Under Elop's leadership, Nokia revenues dropped 40 percent. Handset revenues fell 54 percent. Even Nokia’s smart phone sales fell 69 percent, pushing the company’s market share from 33 percent to 3 percent. After once being flush with cash, the company's credit rating fell from investment grade to junk.

Elop was fired in September.

Perhaps the most fascinating story of wealth destruction comes out of Brazil, where Eike Batista, once the world’s 8th richest man, managed to destroy two of the largest businesses in the country.

Batista, a poster boy for flamboyance and exaggeration, boasted that he would soon become the world’s richest man. He also claimed that his oil and gas company, OGX, had more than 10 billion potential barrels of oil.

He was wrong on both counts.

The company had grossly exaggerated its oil reserves and underreported its debt. When the house of cards began to crumble, it crumbled quickly.

OGX filed for bankruptcy in October. Batista’s shipbuilding company followed suit a week later, destroying the remainder of what had been a $35 billion personal fortune in only 24 months.

Former JC Penny CEO Ron Johnson is the grand prize winner, after being fired in April after only 17 months on the job.

The former Apple executive and alleged retail genius presided over one of the most rapid destructions of shareholder value in retail history. Shortly after announcing his transformative vision for JCPenney that sent its shares soaring, the highly-promotional CEO sold large amounts of his personal stock in company (at $41.42 a share vs. $8.20 today.)

His new corporate logo appeared to capture the essence of his new “fair and square” pricing strategy, but customers seemed to miss the message. Penney’s same store sales subsequently dropped 32 percent.

In his attempts at store renovation, Johnson made changes to JCPenney’s stores that should have been phased in over a multi-year period, in one. Who really needs a roll-out?

Sales declined from $17 billion to $12 billion and the company continued to hemorrhage greater amounts of cash until the board fired him, before he could send the company into bankruptcy.

Congratulations to all of the winners. But not their shareholders.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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