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The Motley Fool's readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first, and who are generally deserving of praise from investors. For reference, here is last week's selection.
This week we'll keep the good times rolling by taking a closer look at why Goodyear Tire & Rubber (NYSE: GT ) CEO Richard Kramer is truly an incredible CEO.
Kudos to you, Mr. Kramer
The tire market is far from being in fantastic shape, thanks to a sharp drop-off in demand from Europe. The seemingly endless sovereign debt crisis in Europe continues to hamper auto sales and caused both Ford (NYSE: F ) and General Motors (NYSE: GM ) to reduce their earnings expectations earlier this year.
Goodyear, along with Cooper Tire & Rubber (NYSE: CTB ) and Bridgestone, has suffered from weaker global demand for new and replacement tires, but have been lucky enough to benefit from low input costs (primarily low rubber costs). Cooper Tire & Rubber earned $51.7 million in its recent quarter, up from just $11.5 million in the year-ago quarter, but was aided by $67 million because of lower raw-material costs.
Goodyear is a different case altogether. Even without one-time gains clouding its results, the company reported record North American tire operating income for any quarter: $188 million. This business segment is on pace to tally $450 million in operating income in 2012, one full year ahead of target. The fact that these results were achieved with tire sale levels similar to those witnessed during the depths of the recession provide demonstrable evidence that Goodyear's restructuring efforts and cost-cutting actions are working far better than anyone had anticipated. Kramer continues to insinuate that despite the headwinds, Goodyear remains on track to deliver $1.6 billion in operating profit in 2013 -- that's a forward P/E of just over 5 for those of you interested!
A step above his peers
If Goodyear's premier valuation and performance relative to its peers doesn't make the company stand out, then perhaps the actions of its management will.
In late July, Goodyear teamed up with the U.S. Chamber of Commerce's "Hiring Our Heroes" program to announce that it would be hiring 1,000 veterans over the course of the next three years. If you recall, this is one reason I chose Disney's (NYSE: DIS ) Bob Iger as an incredible CEO -- his commitment to hiring military veterans.
In addition to creating 1,000 new jobs for military veterans, through the "Goodyear Gives Back" program the company raises support and money for the "Support Our Troops" nonprofit organization. For instance, the company recently rebranded its tires for a NASCAR and NHRA event to raise money for the troops. Goodyear is also particularly accommodative, from a human resources perspective, to those employees who are currently active members of the National Guard and Reserve.
Goodyear is also doing its part to reduce its carbon footprint, having sent zero waste to landfills since 2008 and reducing its nonconforming environmental fines from 33 in 2008 to just 7 in 2011.
Two thumbs up
An environmentally sustainable tire company? Goodyear is working toward that point! Goodyear also understands that its company is boosted by its surrounding community and those who serve to protect this country. Given Mr. Kramer's well-defined cost-savings strategy, demonstrably smaller carbon footprint, and plan to hire military veterans, I can think of nothing better to do than to honor Richard Kramer with two thumbs up from the skeptic of all skeptics, me!
Do you have a CEO you'd like to nominate for this prestigious weekly honor? If so, then head on over to the new "CEO of the Week" board and chime in with your fellow Fools on who deserves some praise. If you don't have a nominee yet, don't worry: You can still weigh in on other members' selections.
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