NEW YORK (MarketWatch) — The envelope, please…
The winner of this column’s Worst CEO of the Year award is Ilia Lekach of Parlux
a perfume maker best known for the Paris Hilton and Guess brands.
Runner-up for the second consecutive year, no surprise for all but those who thought he should’ve snared the No. 1 spot: Overstock.com’s
While ultimately a no-brainer, this year’s decision was harder than in years past — and I don’t know why. Maybe it was the option-backdating scandal. Maybe there were an unusually large number of big-name companies that have turned in mediocre results. Maybe it was something in the water.
Whatever the reason there were many others who, based on the headlines, might look equally if not more deserving. These include such high-profile names as Home Depot’s
Bob Nardelli, Citigroup’s
Chuck Prince, Jim Tobin of Boston Scientific
Kevin Rollins of Dell
Paul Pressler of The Gap
and Richard Wagoner of General Motors
Steve Jobs even snared a few nominations.
With the exception of Jobs, who gets lumped in because of his company’s options-backdating debacle, the principal sin of the others is either destruction of or failure to create shareholder value.
Nardelli has been everybody’s favorite punching bag. But does he really deserve title of worst CEO? I don’t think so. He took control of a company that had already hit hard times, in part because it opened too many stores that cannibalized one another in the face of a fast-growing Lowes. While Nardelli has clearly made some ridiculous missteps, such as his abysmal handling of this year’s shareholder meeting, you still have to wonder whether anybody else could have really done better given the circumstances. (Oh, sure, somebody might have, but it doesn’t make Nardelli the “worst.”)
As for Prince, writes one reader, “The man is single-handedly standing in the way of roughly $80 billion in shareholder value.” He adds, however, “Chuck Prince is not a kook or a crook like many of the worst CEO candidates. He’s a man of high ethical standards who, admittedly, was dealt a tough hand. But he hasn’t played that hand well.” Maybe not — or maybe not yet; but that’s no reason to name him the worst and he has plenty of company.
Tobin’s sin, according to some readers, was getting caught up in the hubris of a bidding war for Guidant, which as it turns out had evolving problems of its own.
Kevin Rollins? If he gets named the worst, so should Michael Dell, who along with Jobs several years ago was considered by this column to be among the best CEOs of the decade. Dell lost to Howard Schultz of Starbucks. What about Dell’s accounting controversy, for which he company is currently being probed by securities regulators? Goes back before Rollins was running the joint.
Pressler, meanwhile, has a job that may be tough for anybody: Convincing teens that Gap is cool, again.
Wagoner? Hard to call somebody the worst for having a next-to-impossible job.
Then there’s Jobs. The backdating is bad, but with Apple’s turnaround, Jobs has proved he is what a CEO is supposed to be: A risk-taker who delegates, inspires others to think outside of the box and spends more time running his business than running his mouth. (That doesn’t mean Apple’s stock isn’t overvalued or that I believe the company is doing the right thing by not breaking out operating segments by business line — something for which it has come under this column’s scrutiny. However, he has proven skeptics about Apple wrong by performing. Period.)
That’s just the opposite of this year’s winner and runner-up, Lekach and Byrne, who epitomize some of what I believe make bad CEOs: Arrogance in the face of fumbled financials, and blaming short-sellers for a host of problems.
Unlike Lekach, Byrne has for several consecutive quarters taken full blame for one corporate screw-up after another. Don’t get me wrong: Byrne has done an atrocious job, proving himself inept at running a public company. And while his idea for Overstock is intriguing, his execution has been a failure, especially relative to what he led shareholders to expect. Worse, he has spent shareholder time and money using innuendo and lies to create a conspiracy theory that includes journalists (including yours truly), regulators, politicians and others as his company’s performance plummeted.
Lekach, meanwhile, has appeared to treat Parlux like a personal fiefdom. I first wrote about the company in 2005 after it issued a press release saying it was going to seek strategic alternatives to “enhance” shareholder value. That would’ve been standard operating procedure for corporate America if its stock hadn’t already exploded 10-times higher. (Needless to say, there was no deal.) This followed a botched plan in 2003 to take the company private at a split-adjusted $2 when the stock as trading at $1.50.
Then, this year, Lekach was back again with another LBO plan at $19.50 a share, or roughly double the stock’s price at the time. That hinged, of course, on whether he could get financing, which he couldn’t. The stock has since lost two-thirds of its value from its highs of the year. Lekach, with the help of his board, has a plan to stick it to shareholders if they approve a “change in control”: He would get double his annual salary of $475,000 through early 2009 and twice his unexercised warrants.
Adding insult to injury, at the company’s annual meeting this year he lashed out at critics with an arrogant tirade, saying, “We have beaten you before. We will beat you again. Those of you who have no faith in me our company, you inspire me to higher levels. We will perform and succeed. Those of you who do not follow me, you will be left behind.”
Just like his shareholders.
Lekach didn’t return calls seeking comment.
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