Lessons from CEOs You Can Bank On

By AnnaLisa Kraft - July 25, 2012 | Tickers: AMZN, COH, JPM, M, RL, SBUX, DIS, YHOO | 0 Comments

• Email
• Print

Ever since Marissa Mayer took the job as CEO at Yahoo! Inc (NASDAQ: YHOO), everyone and their brother have been giving her advice. As I was already planning a post on CEOs that are essential to their companies’ success, I’ll jump on the bandwagon and suggest Ms. Mayer take a few lessons from these CEOs you can bank on.

Lesson 1.  Don’t Be Afraid To Have A Soul

Starbucks Corp. (NASDAQ: SBUX) CEO Howard Schultz grew up in a Brooklyn housing project and never forgot those hard lessons. In an unusual show of corporate compassion, all employees working over 20 hours per week get comprehensive medical coverage and stock options. This hasn’t hurt the bottom line, however, as it’s made being a barista a desirable position and dramatically cut employee turnover. Starbucks has been on a tear since he returned to work.  This name has a 1.30% yield, a 30.03 P/E, and operates almost 17,000 stores globally.

Lesson 2. Don’t Be Afraid to Buy In With Your Own Money

Shareholders love it when CEOs have their own skin in the game. Two notable CEOs with sizable positions in the companies they head are Ralph Lauren, CEO and founder of Ralph Lauren Corp., who still holds 595,298 shares, and Lew Frankfort of Coach, Inc, who owns over 2 million shares as of July 2. Coach has a 2.00% yield and a P/E of 17.58. Ralph Lauren has a P/E of 20.91 and a 1.10% yield. Ralph Lauren has had an amazing run from under $15 a share in 2000 to this year’s high of $182.48. Coach, too, has moved from around $15 a share in 2009 to this year’s high of $79.70.

Lesson 3. Don’t Be Afraid To Think Outside The Box

Taco Bell used to have a slogan, ‘Think Outside The Box,' and as a segment of Yum! Brands Inc, along with Pizza Hut and Kentucky Fried Chicken, it’s been a motto for CEO David C. Novak as well. Just this week he was named Chief Executive  Magazine’s 2012 CEO of the Year. Novak has maintained an average of 13% earnings per share growth for ten years and has pioneered  food localized for international tastes and customs at its franchises globally. He was also lauded for a leadership training program he has initiated company wide. Yum!’s success in China has been raking in money since its introduction of KFC there in 1987. Yum! has a 17.58 P/E and a 2.00% yield.

Lesson 4. Don’t Be Afraid Of Gender Stereotyping

Just ignore it as Terry Lundgren, CEO of Macy’s, Inc, obviously has. Few retailers so thoroughly understand the female (and male) shopper. Lundgren has placed an emphasis on Macy’s branded fashions, as well as having beauty counters always placed prominently by the front of all Macy’s stores. His ‘My Macy’s’ initiative to localize merchandise to shoppers’ tastes has kept Macy’s in their hearts and minds despite the lure of dollar stores and discounters. Macy’s has an attractively low P/E of 11.66 and a yield of 2.20%. Macy’s hit under $10 during the 2009 economic crisis but has rebounded to $42.17 a share this year. Macy’s reports August 8.

Lesson 5. Don’t Be Afraid To Speak Your Mind

Who else comes to mind but Jamie Dimon, the outspoken CEO of JPMorgan Chase &Co (NYSE: JPM). Dimon has famously challenged Federal Reserve Chairman Ben Bernanke about plans to raise the capital reserve requirement for US banks as “anti-American.” He also has been unflinchingly apologetic about the LIBOR scandal. His earnings release commentary is almost always controversial, but he has ably steered JP Morgan Chase through difficult times. The P/E is now 7.84 and the yield is 3.50%, not as high as the widows and orphans were used to in the big banks’ glory days, but pretty respectable (as a bank should be). JPMorgan Chase is down from its 52 week high of $46.49 and there are many financial gurus who still say you can’t touch the banks, but if you had the inclination, JP Morgan Chase is a steady, well-regarded name.

Lesson 6. Don’t Be Afraid To Dream Big

In Steve Jobs’ absence, the big dreamer by default may be Jeff Bezos, CEO of Amazon.com Inc (NASDAQ: AMZN). Bezos has transformed a small internet bookseller to a worldwide phenomenon that has changed forever the way people shop.  Bezos makes many of the lists of best CEO’s for his willingness to try new things, like the Kindle and Kindle Fire. Amazon has a high flying P/E of 188.51 but its growth over the last two decades from a company at a couple bucks a share to this year’s all time high of $246.71 is, of course, amazing. Amazon reports on July 28.

Lesson 7. Don’t Be Afraid To Take Calculated Risks

Robert Iger, CEO of Walt Disney Co. (NYSE: DIS) has bought some great properties in his stint as head of the Mouse House, including Pixar and Marvel Entertainment. This summer has seen “Brave” and “The Avengers” as box office hits, offsetting the embarrassment for Disney that was “John Carter." 'What Have You Done Lately?' is not just an entertainment cliché but a reminder to get over failures quickly in business and move on to making the hits. Iger managed to brush it off and deliver those other hits. Disney has been performing well this year and is trading near its 52 week high of $49.92, with a P/E of 17.41 and yield of 1.20%. Disney reports on August 7.

It’s no accident that most of these CEOs have come from some of the most difficult and customer driven businesses, fashion retailing, entertainment, and restaurants.  Banking and online commerce, too, are trust driven and challenging as well. These are the CEOs Ms. Mayer should emulate in her task to turn around Yahoo and monetize its search service. Shareholders are anxiously awaiting the Marissa Mayer Miracle. Good luck to you, Ms. Mayer, take your time, think things through, and get plenty of sleep before the baby comes.

• Email
• Print
• Feedback