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Opening Segment #3: |
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'Wall
of Shame:
The Verdict' |
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Wednesday,
June 10, 2009 |
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Jim's
rating on
this stock |
STOCK
SYMBOL |
Closing
price that
day |
Full Company Name |
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TXT |
11.43 |
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Jim:
We have received
literally hundreds
of nominations for
the recent opening
of the
Mad Money Wall of
Shame...
hundreds...
It's time for me to
decide which of the
CEOs you suggested
deserves the
disgrace, the scorn,
and the humiliation
of having his or her
face put up on
the Wall...
You report, we
decide...
Before I announce
the latest loser
though, I want to go
through some of your
most frequent
suggestions, and
explain why these
CEOs do not deserve
to be on the
Wall of Shame...
and, in some cases,
why they don't even
deserve to be
embarrassed...
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See comments continued below...
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Wednesday,
June 10, 2009

(Cont'd from
above)...
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Jim:
First, very
controversial, is
Aubrey McClennan...
the CEO of
Chesapeake Energy Corp. (CHK)...
He's had his name
put forward a number
of times. Remember
though, one of the
criteria for going
on the
Wall of Shame...
the stock needs to
do better if the
person leaves. And
that is definitely
not the case with
Aubrey McClennan and
Chesapeake... And we
need to see a record
of underperformance,
not outperformance.
I am not sparing
McClennan from the
Wall because he's a
good friend to the
show, of which he
is. I'm keeping him
off because,
frankly, when you
look at how
Chesapeake has done
under his
leadership, the guy
deserves the
congressional medal
of value creation,
even if buying all
that stock on margin
last year was
wrong... and he was
being forced to sell
it when it came
down... a big
mistake. He admitted
it on air.
McClennan founded
Chesapeake and took
it public on
February 4th of
1993, at a
split-adjusted
$1.33. It's now at
$23.92. That is up
an incredible 1,698%
under his
leadership. You want
to put him up on the
wall, up 1,698%?
During the same
period, if you look
at other natural gas
companies I like...
Anadarko Petroleum
(APC),
up 556%...
Equitable, up
301%...
Apache Corp. (APA),
up just 798%...
That's not even half
the size of the
gains of
Chesapeake...
Although, it's
important to point
out that another one
that I really like,
XTO Energy Inc. (XTO),
did better. That's
up 3,791%. These are
all in the same
period.
Now, compare the
stock... Aubrey's
stock... to the S&P
500... It's up only
109% over that
length of time. I
think you can see
why it would be a
terrible injustice
to put Aubrey
McClennan up... He's
done a terrific job
over the long term.
He doesn't belong on
the
Wall of Shame.
But, I will say
this... He pays
himself way too
much... something I
believe he should
rethink next year...
while, he is good,
nobody should be
paid that much after
the terrible year
his shareholders
had.
Some of you have
suggested that Irene
Rosenfeld, the CEO
of
Kraft Foods Inc. (KFT),
belongs with these
people on the
Wall of Shame...
But that too would
be a miscarriage of
justice. When
Rosenfeld took over
on June 26th of
2006, Kraft was at
$31. Now the stock
is at $25.85. It's
down 16.6%. No great
shakes, but better
than the S&P 500.
That's down 25%.
And, when you
include dividends,
Kraft is actually up
8.2% since Rosenfeld
took over... better
than a sharp stick
in the eye... or
Cheez Whiz...
Now, on the website,
this is
unbelievable... this
guy is really
hated... Bob
Nardelli... who has
just stopped being
the CEO of
Chrysler... He has
won the most votes
by far... But
Nardelli was already
on the
Wall of Shame
back when he was the
despot of Home
Depot.
However, since you
want Nardelli shamed
so badly... Now, you
want Nardelli shamed
and I've heard
you... and you know,
while I may be a
gentleman... you
want him shamed so
badly... in
baseball, old-timers
went in... people
who got voted in
long after they
played... and, if we
had one on our Wall
of Shame, we would
enshrine Nardelli in
the old-timers'
wing.
But since he can't
do any damage to
shareholders now,
until he's appointed
CEO of the next
company, and didn't
do any damage to
shareholders at
Chrysler because
there weren't any,
sticking him on the
actual Wall of Shame
would be no
different than
putting up say, Rick
Wagoner, which gets
us nowhere, although
it would be very
satisfying, as both
clowns... both
gents... cost the
taxpayers
fortunes...
So who gets the
great dishonor of
being added to the
Wall of Shame
tonight?...
Let me read you this
nomination from
buddy, pal, friend,
Brian, who writes...
Viewer Email:
Q:
Hey Jim,
Hands down, Lewis
Campbell of
Textron Inc.
(TXT)
should be added to
the
Wall of Shame.
He took over a
once-thriving
company and ran the
stock into the
toilet from an
all-time high of $98
to a low of $3. His
European pump
company acquisition
strategy was a total
bust. He also relies
on Bell and Cessna
to carry the entire
load.
Jim:
Now, Brian...
the all-time high
was actually a
little lower than
that, but the point
does stand. Lewis
Campbell has done
just an awful job at
Textron, and he
deserves our scorn.
I say, welcome to
the Wall of Shame...
And, by the way,
let's just make one
thing perfectly
clear... I did not
mean to insult the
fine people at
American Standard,
long since sold, who
makes the Champion
Toilet... but
Campbell definitely
did flush TXT right
down the toilet.
When Campbell became
the CEO of Textron
on July 1st of 1998,
his stock was at
$36.63. It's now at
$11.43, down a cool
69%.
It's a conglomerate
with a financing
business, a private
jet business that
owns Cessna, a
helicopter business,
and an aerospace
components business.
So let's see how its
peers did over the
period...
Boeing (BA)
is up 10%,
United Technologies
(UTX),
up 136%,
General Dynamics (GD)
up 152%...
L-3 Communications Holdings
Inc. (LLL)
up 349%... and the
S&P okay, is down
19%, but that's
still much better
than the 69% decline
in Textron, as CEO
Campbell just hasn't
been able to solve
the problems with
Textron's financing
business, which
caused it to
dramatically lower
the bar with its
earnings' guidance.
Lewis Campbell may
not know how to run
a company, but he
sure knows how to
trash shareholder
value. He is a
buy-high, sell-low
guy from way back...
and that's why I
agree with Brian,
and I think he
belongs on the
Mad Money Wall of
Shame...
[verbatim recap]
[end of segment]
Read Jim's next Segment
here
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