The list for 2015 was topped by Lars Rabien Sorenson, CEO of Danish pharmaceutical company Novo Nordisk, who replaced Jeff Bezos, founder & CEO of e-commerce giant Amazon.
Bezos, who had stood first in the 2014 HBR list, topped on financial parameters this year, too. But his overall ranking slipped to 87th. His low position, though, could be attributed to a change in HBR’s methodology for compiling the list this time. Rather than considering only the hard stock market numbers — total shareholder returns and the change in a company’s market capitalisation since its CEO took over — the research has also looked at companies’ environmental, social, and governance (ESG) performance under the current chair. Bezos’ ESG ranking was a dismal 878th. (CEOs OF THE YEAR)
The HBR list features 100 best-performing CEOs and chairpersons of companies across sectors and geographies. Novo Nordisk’s Sorenson was followed on the 2015 list by Cisco Systems’ John Chambers and Inditex’s Pablo Isla. Martin Winterkorn, former CEO of the controversy-ridden automaker Volkswagen, also featured quite high on the list, at number 20. At present, Winterkorn is facing inquiry over his role in the emission scandal surrounding Volkswagen.
The list also brought insights into the profile of those at the corporate peak. Only two of the top 100 were women, while only 26 of the top bosses had a Master of Business Administration (MBA) degree — Banga was also one of the few who held MBA degrees. Only 19 on the list were also the founders of the company they managed.
A region-wise distribution of the top 100 CEOs showed the US had the largest share — as many as 41 US-based firms were present on the list. Taiwan, Norway and Netherlands brought up the rear. Among sectors, consumer goods, health care and financial services, with 13 representatives each on the list, had the biggest chunk of CEOs in top 100.
HBR had compiled the list with the companies that featured in the S&P Global 1200 by the end of 2014. After excluding those who had been at the helm for less than two years and those who had been arrested or convicted of crimes, HBR’s sample came down to 907 CEOs from 896 companies (several companies have co-CEOs) coming from 46 nationalities and running enterprises based in 30 countries.
Each CEO was awarded two sub-rankings — financial and ESG — the average of which was used for calculating the overall rank. According to HBR.com, for financial ranking, each CEO’s tenure was evaluated under three parameters — country-adjusted total shareholder return (including dividends reinvested); industry-adjusted total shareholder return (including dividends reinvested); and change in market capitalisation (adjusted for dividends, share issues, and share repurchases) measured in terms of inflation-adjusted US dollars. Each CEO was ranked for each financial parameter, and the average of these was used for his or her overall financial ranking. HBR sourced environmental, social and governance research and analytics data from Sustainalytics to rate firms’ ESG performance on a scale from 0 to 100. The average of these was used to arrive at an individual’s ESG ranking.
To calculate the final ranking, HBR combined the overall financial ranking and ESG ranking (weighted at 80 per cent and 20 per cent, respectively).