Great Numbers! and Applied Finance Group collaborated with Chief Executive Magazine’s 2nd Annual Wealth-Creation Ranking of S&P 500 CEOs. The ranking is based on four factors:
- How good a company was at making real money (operating cash flow in excess of its risk-adjusted cost of capital)
- Its prospects for continuing to do so
- Its wise use of capital
- How highly the market values the company’s assets
The ranking, spanning returns from July 2006 through June 2009, did not include CEOs who had been in their roles for less than three years and the S&P 500’s 16 REITs were not ranked.
The three-year average total shareholder return (share-price return percentage plus reinvested dividends) for the top 50 companies, 48.3 percent (down from 135.6 percent in last year’s ranking). This compares to the bottom 50 companies’ average 3-year TSR of -11 percent (down from -6.1 percent last year). The S&P 500’s average 3-year TSR was -5.8 percent this year, down from 13.6 percent last year.
Mastercard, led by Robert Selander, topped the ranking. The report also includes three of the other top wealth creators and three of the worst wealth destroyers.
“In creating and publishing these rankings, we’re trying to help companies realize their upside potential,” said Drew Morris, CEO of Great Numbers. “We’ve created a way for the S&P 500 companies’ senior-management teams to look at the reality of their performance through the same lens professional investors use and to use the insights gained to create more shareholder wealth going forward.”