3. Andrea Jung of Avon
This year also spells the end of Andrea’s Jung’s career at the top of Avon after a string of missteps that has me putting her at No. 3 on my list. Avon’s performance has been on a downward spiral for several years, and Jung’s marketing know-how hasn’t been enough to overcome her weak operational skills. Avon has had poor results in key global markets, the heart of Jung’s strategy for righting the ship. An investigation into possible violations of the Foreign Corrupt Practices Act has cost the company hundreds of millions of dollars. To be fair, Jung does not deserve all the blame. The board has stuck with her over the years, perhaps entranced by her celebrity status. But with third-quarter earnings down 81 percent, the dividend cut by three-quarters and the stock down 19 percent on the year, Jung’s successor, Sherilyn McCoy, has her work cut out for her.
2. Aubrey McClendon of Chesapeake Energy
The second worst CEO of 2012, in my book, is Aubrey McClendon of Chesapeake Energy. An aggressive visionary who has benefited from the growth in hydraulic fracking, McClendon seems unable to keep his corporate job separate from his personal investments. In 2012 he personally borrowed $500 million from a company that is a major investor in Chesapeake. He ran a private $200 million hedge fund trading oil and gas even though he is CEO of a company in the same industry. Corporate jets are routinely used for personal purposes. To me, these actions demonstrate bad judgment and potential conflicts of interest, and lead to understandable concern from shareholders.
1.Brian Dunn of Best Buy
Finally, I believe the worst CEO of 2012 was Brian Dunn of Best Buy, who left the company in April. Under his tenure, Best Buy’s share price declined more than 30 percent, with much of that occurring in the last two weeks of his leadership. The Dunn turnaround strategy had multiple problems, such as believing cost-cutting would cure everything as the company has become the showroom for Amazon. Converting big-box stores to smaller units might reduce overhead, but it doesn’t solve the essential problem that customers can often find much better prices for the same products online. Dunn also emphasized up- and cross-selling rather than improving basic customer service and online offerings. He continued the policy of buying back shares to support the stock price even though fundamental problems with strategy were actually pushing share price down. Finally, in the midst of all this turmoil, allegations of an inappropriate relationship with a 29-year-old subordinate came to light, leading to his resignation from the company.
That’s my list for 2012. Whom would you add?
Sydney Finkelstein is a professor of strategy and leadership at the Tuck School of Business at Dartmouth College, and the author of “
Why Smart Executives Fail
.” The list reflects his opinion.
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