Opening Segment #3:
'Wall of Shame:  The Verdict'
Wednesday, June 10, 2009
 

Jim's
rating on
this stock

STOCK
SYMBOL

Closing
price that
day

Full Company Name

TXT

11.43

Textron Inc. (TXT)

and its CEO,
Lewis Campbell, newly-inducted into the
Mad Money Wall of Shame


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...     

 

Market Results today:

Dow:  - 24

Nasdaq:  - 7

S&P 500:  - 3

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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...

 

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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]


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