The Harvard Business Review (November, 2014) just published its list of the Best Performing CEOs. This list should interest investors since these top 50 CEOs have been undeniably effective in delivering total shareholder returns which averaged 1,350% while on the job. That translates into a 26.2% annual return!
One classic example of why investors should hitch their wagons to these “best” CEOs, such as Warren Buffett at Berkshire Hathaway (BRK/A), is that those investors who did so have been rewarded with a 950% return over the past 20 years.
From my experience in Silicon Valley, these individuals are obviously talented and driven with a very high bandwidth, are just as often somewhat quirky. Their shareholder letters can make for interesting reading as they reveal their key business principles and management styles.
Common to most of this group (and unlike many short-term focused CEOs) is that they focus on the long term and possess a powerful strategic vision as to implementation. Another common denominator is that their companies connect effectively with customers, employees and the communities where they operate. Interestingly, about a quarter of them are MBAs and a quarter are engineers by training. That is all fundamentally good and academically interesting, but as an investor, I believe performance is paramount.