Market Overview

The 8 Most Controversial CEOs in America

There are a number of controversial CEOs on Wall Street. Any number of different personality quirks, management styles or missteps can gain you admission to the "most controversial club."

One reason for this is likely because of the eccentric personalities displayed by many entrepreneurs. At times, these eccentricities can clash with the traditional staid culture of finance and Wall Street.

Other CEOs are criticized for being unreasonably headstrong and stubborn. This also makes sense given that such attributes often stem from self-confidence, which is a characteristic that is frequently found in high supply in the boardroom.

In fact, it is not necessarily a bad thing to be viewed as "controversial" on Wall Street -- so long as your company performs up to expectations. When things go south, however, past missteps, bold proclamations, or an indifferent attitude can come back to bite a CEO.

Many institutional investors put considerable emphasis on a company's management team when deciding to invest in a stock. Once trust is lost, it can be difficult to get back. While the CEOs on this list may not have completely lost the trust of their shareholder base, they have all but certainly found themselves on the hot seat for one reason or another.

Here is a look at 8 of the most controversial CEOs on Wall Street today:

Aubrey McClendon, Chesapeake Energy (NYSE: CHK)

Chesapeake's founder and CEO makes the list for his aggressive nature. In 2008 he received a massive margin call after making aggressive bets on his company's stock with borrowed money.

Despite having most of his Chesapeake stake wiped out due to his reckless speculation, McClendon was one of the highest paid CEOs on Wall Street in 2008. The executive's reputation for brashness was only solidified in 2012 after a special report from Reuters revealed that he had borrowed $1.1 billion to make personal investments in wells drilled by Chesapeake.

Under a special benefit program, known as the Founder Well Participation Plan, McLendon was given the opportunity to personally earn 2.5 percent of the profits in every well that Chesapeake drilled, as long as he payed for 2.5 percent of the expenses. Longtime analysts and shareholders were in the dark about the loans.

Particularly shocking was the fact that the loans themselves were collateralized by the very same wells he was investing in, opening up serious conflict of interest questions. The fallout from the report burnished the perception on Wall Street that McLendon runs Chesapeake more like a personal fiefdom than a publicly traded natural gas company.

Andrew Mason, Groupon (NASDAQ: GRPN)

Mason, 31, has been criticized heavily over the last year as Groupon shares have plunged. After going public at $20 per share, the stock currently trades under $5. Some investors view him as inexperienced, immature, and overwhelmed in his job.

Mason did little to refute his immature label last April when he drank beer during a meeting designed to instil investor confidence. Under Mason, the company has had difficulty transforming its early "wacky" and "fun" start-up culture into something more in-line with a publicly traded company with more than 11,000 employees and $2 billion in annual revenue.

He also hasn't always done a good job explaining the Groupon story to Wall Street which has led some analysts to argue that the company lacks focus. Furthermore, Groupon was badly stung by an earnings restatement in April 2012. As a result of the missteps, many investors want him gone, as evidenced by the share surge in Groupon whenever rumors surface that he could be forced out as the company's head.

Mark Pincus, Zynga (NASDAQ: ZNGA)

Like Mason, shares of the company Pincus founded have collapsed. But beyond the share price, Pincus has been attacked for his overbearing nature, which has caused many of Zynga's key employees to flee. The online game-maker has a lot of problems and investors have to ask themselves if Pincus' leadership isn't one of the main obstacles to a turnaround.

Zynga's performance has been horrible since the company went public at $10 per share in December of 2011. With Zynga in dire straights, it is hard to blame investors who are displeased with Pincus, particularly given his reputation as being a difficult boss.

Ron Johnson, J.C. Penney (NYSE: JCP)

Johnson is a "love him or hate him" type of leader. Increasingly, more and more people hate him.

He was brought in from Apple (NASDAQ: AAPL) to revolutionize J.C. Penney, but unfortunately for Johnson, his turnaround attempts have floundered thus far. In his defense, Johnson's strategic vision for the retailer was never going to be a quick fix.

Nevertheless, the radical changes that the executive has implemented at the company have turned off both customers and investors in the near-term. Under Johnson, J.C. Penney has completely revamped its pricing structure and also made major marketing changes.

Unfortunately, the result has been a persistent decline in sales as confused customers flee the retail chain. Over the last year, J.C. Penney shares are down almost 47 percent. Johnson deserves more time to right the ship, but so far Wall Street hasn't been impressed.

Reed Hastings, Netflix (NASDAQ: NFLX)

Reed Hastings is known for his outspoken nature. He called out short-sellers of his company in 2011 and told them that they better cover their bearish positions. Hopefully they didn't listen to him, because the stock tumbled spectacularly just a few months later.

Hastings miscalculated badly when he decided to split Netflix's streaming and DVD delivery businesses, renaming the latter Qwikster. Customers were so outraged by the idea that Netflix was forced to scrap its plan within weeks. Needless to say, investors were not pleased with the debacle either.

Hastings has also been fined by the SEC for making a post on Facebook that was considered material information about his company. Not smooth. For all of his missteps, however, Hastings is still considered a genius in many business circles. While Netflix is certainly down, it is far from out.

Mark Zuckerberg, Facebook (NASDAQ: FB)

Mark Zuckerberg is a polarizing figure. If you need convincing, just watch the film The Social Network. While web users may spend a lot of time on Facebook, it doesn't mean that they are always happy with Zuckerberg and his company. In particular, Facebook has been dogged for years regarding privacy issues. Although people haven't abandoned the site, most users have found themselves very frustrated with Facebook at least once.

The company's relationship with Wall Street has also been rocky. Facebook's IPO was a first-rate debacle. The subsequent death defying plunge in the stock only made matters much worse. Although shares have been bouncing back in recent months, they are still trading around 18 percent below its $38 IPO price.

On a personal level, Zuckerberg has irritated investors with his seeming indifference to the Wall Street crowd. Showing up for investment meetings in a hoodie is just one example of this.

Steve Ballmer, Microsoft (NASDAQ: MSFT)

Over his nearly 13-year reign, Ballmer has done little to reward Microsoft shareholders. Rather than continue to build on Windows' dominance, Microsoft has largely stagnated. In terms of innovation, Microsoft has been a disappointment under Ballmer.

In many ways the company has become a tech dinosaur, although it is still a very profitable one. When the CEO took the reins in 2000, the company was deriving most of its revenue from Windows and Office. Today, nothing has changed.

Ballmer has bet the future of the company on Windows 8, using it as a way to play catch up to the mobile trend that has largely passed Microsoft by. Hedge fund manager and Microsoft investor David Einhorn said the execuitve should be fired back in 2011.

Investors have urged the company to increase shareholder value by implementing large stock buybacks or increasing the dividend. Ballmer, however, has insisted that his company can still be a growth stock but he has been unable to deliver the goods on that front.

Lloyd Blanfein, Goldman Sachs (NYSE: GS)

In many ways, Lloyd Blankfein's appearance on this list is a product of circumstance. He has been the CEO of the world's most powerful investment bank during a time when Wall Street has come under intense scrutiny and criticism. For his part, however, Blankfein has certainly made some public missteps.

Under his stewardship, Goldman Sachs paid a record $550 million in 2010 to settle a fraud case brought by the SEC.

That same year, in proceedings related to the financial crisis and Goldman's trading in mortgage securities, Blankfein was publicly castigated on Capitol Hill. Due to his high profile position, Blankfein has become a lightening rod for criticism of the financial industry and he hasn't always handled it well.

The executive received widespread scorn when he said in a 2009 interview with The Times of London that Goldman Sach's was "doing God's work." In light of the controversy that has surrounded both Goldman Sachs and Lloyd Blankfein over the last few years, it is amazing that he still maintains the top perch at the investment bank.

Posted-In: andrew mason Aubrey McLendon Lloyd Blankfein Mark Pincus Reed Hastings Ron Johnson Steve BallmerNews Hedge Funds Movers & Shakers Politics Psychology Legal Management Economics Hot Markets Media General Best of Benzinga

 

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