Special Report

America's Most Valuable CEOs

10. John Stumpf
> Compensation to market cap: $137 / $1M market cap
> Compensation: $19.8 million  (check $17.9 million in proxy)
> Market Cap: $145.3 billion.
> Company: Wells Fargo (NYSE: WFC)

Many critics of America’s largest financial firms claim that there are no well-run big U.S. banks. Trading problems at J.P. Morgan (NYSE: JPM), management turmoil at Citigroup (NYSE: C), and the implosion of Bank of America (NYSE: BAC) certainly seem to validate that claim. However, one of the four largest U.S. banks based on assets has remained fairly stable and successful since the recovery of the financial system from the 2008 credit crisis: Wells Fargo. It is a testament to John Stumpf’s success that he became Wells Fargo CEO in June 2007, just before the crisis began. The chiefs of both Bank of America and Citigroup have lost their jobs since then. Meanwhile, Stumpf posted a strong year last year. Wells Fargo net income for 2011 was $15.9 billion compared with $12.4 billion in 2010 and $12.3 billion in 2009. According to the bank’s statements, the improvement was the result of improved credit quality, lower operating costs, and increased deposits.

9. Randall Stephenson
> Compensation to market cap: $123 / $1M market cap
> Compensation: $22.0 million
> Market Cap: $179.2 billion
> Company: AT&T (NYSE: T)

Randall Stephenson’s board had reason to compensate him well for his 2011 performance. While AT&T’s revenue rose modestly from $124.3 billion in 2010 to $126.7 billion last year, the company’s critical wireless division did unusually well. AT&T’s wireless subscriber base rose 8.1% to 103,247,000. This allows AT&T Wireless to jockey with Verizon Wireless for the lead in U.S. cellular subscriptions — a market that has recently been driven by a number of product introductions from Apple and the national changeover to 4G. Critics claim that Stephenson should take the blame for AT&T’s 2011 failed attempt to take over No. 4 wireless carrier T-Mobile for a purchase price of $39 billion. AT&T had to pay T-Mobile parent, Deutsche Telekom, a $3 billion breakup fee. But proponents of Stephenson’s recent performance claim that the FCC and Justice Department would have scuttled the purchase, and that AT&T’s management can hardly be blamed for that. In other words, regardless of the outcome, the strategy behind the T-Mobile plan was sound.

Also Read: America’s Most Profitable Stores

8. Kenneth Frazier
> Compensation to market cap: $116 / $1M market cap
> Compensation: $13.3 million
> Market Cap: $115.0 billion
> Company: Merck (NYSE: MRK)

Kenneth Frazier took over as Merck’s CEO in January 2011. He was the first African-American to run a major U.S. drug company. Frazier did a great deal to earn the chief executive’s role long before his eventual promotion. He was appointed general counsel in 1999. Frazier was the strategists behind Merck’s recovery from the Vioxx crisis. Following the company’s withdrawal of the pain drug from the market and the ensuing countless lawsuits, he helped defend the company in many of the lawsuits and structure a $4.85 billion settlement to resolve the remaining ones. Frazier still has the task of dealing with the ongoing merger problems with Schering Plough, a $41.1 billion deal announced in March 2009. In mid-2011, Merck disclosed another step in the process of post-merger cost cuts that would “reduce its workforce measured at the time of the Merger by an additional 12% to 13%.” Despite the turmoil, revenue rose from $46 billion in 2010 to $48 billion last year. Net income rose from $861 million to $6.3 billion over the same period.

7. Jeff Immelt
> Compensation to market cap: $114 / $1M market cap
> Compensation: $21.6 million
> Market Cap: $189.1 billion
> Company: GE (NYSE: GE)

Jeff Immelt has received criticism for lackluster results and the amount of time he spends on initiatives outside GE, such as his role as President Obama’s Council on Jobs and Competitiveness. However, according to the measure of GE’s market value in comparison to his compensation, he has done particularly well. Immelt’s board can say that he has effectively balanced an extremely complex and disparate portfolio of companies. GE does businesses in almost every nation in the world, so any significant slowdown harms its earnings. Immelt’s supporters would further say that he cannot be held accountable for a drop-off in revenue in a terrible economic market like Europe. Based on net income, GE had a relatively good year in 2011. Despite a modest drop in revenue, net income rose from $11.6 billion in 2010 to $14.2 billion. Immelt can point to his management of the company’s largest unit — Energy Infrastructure — as an unqualified success. The unit’s revenue rose from $37.5 billion in 2010 to $43.7 billion last year.

6. Michael Duke
> Compensation to market cap: $89 / $1M market cap
> Compensation: $18.1 million
> Market Cap: $204.7 billion
> Company: Walmart (NYSE: WMT)

Walmart is the world’s largest retailer and among the largest corporations of any kind. Walmart has over 2 million employees and had revenue of $443.9 billion in 2011. The company’s U.S. operations account for roughly 60% of sales. Walmart has stores in 26 nations outside America. During February 2009, Michael Duke took over the company that Sam Walton founded in 1962. Over the last several decades, Walmart has used its large warehouse model and “everyday low price” programs to outdistance traditional retail leaders such as Kmart and Sears. Duke has had his share of large challenges, the most recent of which was a set of accusations of bribery by executives at the retailer’s Mexican operations. Part of the accusations were that management at Walmart’s worldwide headquarters were aware of the problem.

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