As Warren Buffett sees it, the best CEOs always think like business owners. What he means is that great leaders combine passion, commitment, creativity, and an entrepreneurial drive. That mix isn't easy to find, but Buffett definitely is onto something. So, as Barron's drew up its annual list of the 30 best CEOs around the world, we looked hard for ownership mentalities.
Buffett certainly has one. Berkshire Hathaway is his baby, with Buffett having created $200 billion in market value from a floundering business purchased in 1965. Buffett is working because he loves the job, and so are other wealthy founder/CEOs likeAmazon.com's Jeff Bezos, Starbucks' Howard Schultz and FedEx's Fred Smith – men who could easily have followed the lead of Microsoft's former CEO Bill Gates and gone into philanthropy full time.
Our list includes a mix of familiar names, like JPMorgan Chase's Jamie Dimon andOracle's Larry Ellison, as well as some deserving but lesser-known leaders likePriceline.com's Jeffrey Boyd, Perrigo's Joseph Papa, and Hyflux's Olivia Lum, who heads a high-growth Singapore company with a strong position in water-treatment technology. There's more turnover on this year's list than usual, with 12 new CEOs joining our pantheon. Besides Papa, Boyd, and Lum, the newcomers include Coach's Lew Frankfort, Salesforce.com's Marc Benioff, TD Bank's Ed Clark, and Intel's Paul Otellini. Some of the departing CEOs left as a result of retirement, including Cummins'Tim Solso and IBM's Sam Palmisano. And Apple's Steve Jobs died in October. We removed Netflix's Reed Hastings because his company is having a hard time turning rapid expansion into significant profits. While Wynn Resorts' Steve Wynn has been a huge winner for investors over the past few decades, we dropped him after he had an acrimonious business dispute with a Japanese partner.
It was a tough call to remove several other former members of our club, like Gordon Nixon of Canada's Royal Bank and Daimler's Dieter Zetsche. We felt Ed Clark of TD Bank, Royal Bank's rival, was more deserving after Royal Bank sold its flagging U.S. banking operations last year; a customer-focused TD continues to produce some of the highest returns in the industry from banks both north and south of the border. Instead of Zetsche, we opted for BMW's chief, Norbert Reithofer. BMW remained profitable throughout the downturn, and it maintained its No. 1 position in the luxury-car market while generating some of the industry's best margins.
Our list is global. Eighteen CEOs come from the U.S., seven from Europe, three from Asia, and one each from Australia and Canada. To see Profiles of all 30 leaders click here.
Our selection process isn't based on any formula. It reflects the views of theBarron's staff, drawing on insight from investors, analysts, and executives. Of course, as an investment-oriented magazine, we do look closely at stock-price performance. The best CEOs deliver for all "stakeholders" -- customers, employees and investors. There's no better example of that than Schultz, who provides health insurance and retirement accounts even to part-timers in an industry not known for good treatment of workers. With Starbucks shares up 50% in the past year, shareholders aren't complaining.
We require a CEO to have been on the job for at least three years -- and we prefer five years -- because it takes time to have an impact on a large organization. We generally want companies to have market values of at least $5 billion.
It takes a global perspective to run any big company, and the most successful CEOs tend to be those that have a winning international strategy.
Yum! Brands, which is the parent of KFC and is headed by David Novak, might as well be based in Asia rather than Kentucky -- it gets almost half its profit and much of its growth from China. Rival McDonald's hasn't done as well as Yum! in China, but it produces more than 50% of its earnings outside the U.S. Even Starbucks, a fixture of the American landscape, gets nearly a quarter of its revenue overseas. Priceline quietly has become the leader in the online travel business -- and developed a market value of $35 billion -- by becoming the top site for European hotel reservations.
Notable innovators include Marc Benioff, the brash founder of Salesforce.com, which pioneered the delivery of software over the Internet and created a $20 billion company from the cloud. Joseph Papa has turned Perrigo into the leading supplier of generic over-the-counter drugs -- and generated one of the best shareholder returns in the Standard & Poor's 500 in the past five years. His obsession with quality control is paying off at a time when makers of branded products like Johnson & Johnson have suffered manufacturing problems.
Lew Frankfort has worked for Coach for three decades, and led the company since it was taken public by Sara Lee in 2000. He has created one of the world's top luxury-goods brands and rewarded investors with a 40-fold gain since the IPO. We were wrong to remove him from our list during the financial crisis in 2009; now he's back where he belongs.
The little-known Tadashi Yanai of Fast Retailing has become Japan's richest man, with an estimated net worth of $10 billion, by upending Japan's staid retailing business with the Uniqlo chain. It offers fashionable but budget-priced clothes -- an Asian version of Gap . Now Uniqlo is trying to win over American consumers in select big cities, including New York, with a big store on Fifth Avenue.
Intel's Otellini has done a lot to make the pioneering chip maker relevant again -- and less reliant on personal computers. It's a closet play on the cloud because it makes the bulk of the processors used by servers that store a soaring amount of data, and it's also getting traction in mobile, long a weak spot. Intel's combination of an ample dividend and stock buybacks is a model for how tech companies ought to return cash to shareholders.
We put Larry Fink of BlackRock in our first list of top CEOs in 2005, when he wasn't well known outside of Wall Street. He has rewarded that selection by becoming an industry leader and a go-to guy for policymakers when they need an honest view of business and finance.
Fink isn't afraid to speak his mind. BlackRock may be one of the globe's largest bond managers, but that didn't stop the firm from running recent newspapers ads highlighting the risk in U.S. Treasuries: "2% isn't a return; it's a retreat."
If you think we put the wrong people on the list or want to make a suggestion for next year, please write to editors@barrons.com. We take advice seriously.
