The Best CEO's ...7/30/2003

    There are literally thousands with the title, But only a few who are genuinely great at this increasingly demanding job. Here's how Worth identified the 50 best.

     It is testimony to the rising importance and visibility of the CEO that there's no longer any need to explain what these quintessentially businesslike initials stand for. The image of the CEO has taken its lumps during the past few decades. In the 1970s, the CEO was a bumbling bureaucrat who couldn't even build a car that would stay in one piece. In the 1980s, the CEO was a rapacious plunderer, vilified for laying off honest folk just to acquire a more lavish jet. But today, CEOs are popularly regarded as a new celebrity class--even a nouveau aristocracy. Not so much as captains of industry but as wealth creators. Innovators. Visionaries. The modern CEO-- including the most nerdy among them--even has sex appeal.
     The rising popularity of investing, of course, has made CEOs more prominent as public figures. If they don't know it to begin with, shareholders quickly learn that a CEO's decisions and pronouncements can have a profound and often sudden impact on the value of their holdings. Fortunes can be made or lost in an instant. It's a relationship certain to create both heroes and goats.
     The stories that follow focus on the heroes: 50 CEOs who shine for what they have accomplished to date and who, Worth believes, stand the best chance of excelling well into the future. The 50 leaders are anything but uniform in philosophy or personal style. There's Michael Eisner, Disney's flashy micromanager. And also Bob Kierlin of Fastenal, who wears hand-me-down suits and claims to make no more than four big decisions a year. There's IBM's aloof and distinguished Louis V. Gerstner Jr. And Continental's motorcycle-riding rock and roller, Gordon Bethune. Koichi Nishimura, a Buddhist (and ex-football player), has infused Solectron with a culture that values relationships and attention to detail. Dennis Kozlowski of Tyco is a strategic deal maker. And, of course, there are Michael Dell, Bill Gates, Steve Jobs, and several others who have masterminded the ongoing revolution in the way all of us work and communicate. S Diverse as they are, however, the Worth 50 also all share certain key traits: integrity, vision, an ability to focus, a willingness to take strategic risks, and an unwavering belief in themselves and their companies (as demonstrated by their willingness both to reinvest corporate resources and to tie their personal fortunes to their enterprises).

      First, a reporting team contacted a hundred of Wall Street's sharpest analysts in search of nominations. Essentially, each analyst was asked: "If you had to entrust your personal nest egg to just one or two CEOs, whom would you give it to?" Next, Worth investigated the performance of each CEO within the context of his (or her) industry, the executive's ongoing commitment to the business (as measured by things such as capital spending, research and development, and marketing expenses), the company's short-term and long-term prospects, and its over-all behavior as a socially responsible organization (a sign of enlightened management). An especially promising executive could make the list even without a long tenure as CEO--so long as the candidate had already played a major role in a company's success.

      One note: Many readers will wonder why Jack Welch, the famed CEO of General Electric, does not appear in the following pages. In Welch's case--and a number of others--the deciding issue was age. As a consistent advocate of long-term investing, Worth wanted to identify the CEOs most likely to build value for their shareholders for many years to come. Therefore, no CEO who is older than 60 appears on the list. Sorry, Jack.