The Motley Fool's Second-Worst CEO of the Year Is ...

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It's that time of the year again, folks! It's time to dust off the cyber awards and crown five CEOs with the dubious honor of being the worst of the worst in 2013.

Unlike last year, when we held several rounds of public voting after I picked eight of the best and worst CEOs, I wanted to do something different this year. So instead of picking who I thought should be in each category for 2013, I reached out to as many of my Motley Fool colleagues as possible and aggregated their answers into one list. The result is a considerably more balanced list representing a wider swath of views and likely a more accurate portrayal of the worst CEOs of the year than I could have come up with by myself.

Over the previous three weeks we've looked at my Foolish colleagues' consensus disappointments for the year, which include:

Today, we're going to stick with the tech sector and put CEO Michael Dell of the now privately held Dell Computer in the hot seat as this year's second-worst CEO.

Source: Mikeandryan, Wikimedia Commons.

Why Michael Dell?
If you've been a Dell shareholder at any point since the recession, you've probably not been a fan of CEO Michael Dell, who has done a poor job of keeping up with the PC maker's competition and transitioning the company to succeed in a growing cloud and mobile-based environment.

Perhaps Michael Dell's biggest flaw was in perpetually seeking out the low-end PC market consumer rather than focusing on stylistic and technical aspects that would have improved the attractiveness of its desktops and laptops. For instance, Apple's MacBook Air appeals to a broad range of users with its sleek styling, impressively low weight, and the expectation of reliability since it's a brand-name product. Dell's laptops always had that cookie-cutter appeal to them that failed to differentiate the company's products from lower-quality overseas manufacturers over the past couple of years.

To add, Dell poorly anticipated a shift away from PCs by consumers in favor of mobile devices. Dell was forced to spend heavily on R&D in an effort to boost its relatively new IT-infrastructure business all while aggressively cutting costs, and jobs, in the process. Although Dell was able to deliver a slight uptick in year-over-year PC sales according to research firm IDC in the third-quarter, projections remain negative on PC sales moving forward. What hasn't changed, though, are the exorbitant compensation packages for founder Michael Dell during this cost-cutting process.

Although Forbes notes that Michael Dell's cash bonuses fell from 2012 into 2013, his stock award compensation actually increased. This, mind you, comes after Dell cashed out roughly $150 million in options in 2007 and was granted numerous discounted options between 1997 and 2003 as well. Hardly what I would call a good return on investment for shareholders, considering they lost three-quarters of their value since Dell peaked in 2000. 

Perhaps the most egregious of all moves, and the real reason Dell lands at the No. 2 spot for worst CEO of the year, was Dell and Silver Lake Partners' low-balling of current investors and taking the company private earlier this year for just $13.75 a share plus a special $0.13-per-share dividend. To quote some quick notes from my Foolish colleague Dan Dzombak, who nominated Dell as one of his worst CEOs of the year, Dell "completely mismanaged [the] company for [the] past five years and stole the company from shareholders." As a former shareholder myself, I couldn't agree more.

Dell had numerous opportunities to unlock shareholder value that were introduced by activist investor Carl Icahn and his investment firm Icahn Enterprises (NASDAQ: IEP  ) . Icahn bent over backwards trying to find creative ways for Dell to improve shareholder value while remaining a public entity, including the suggestion of a large one-time dividend, as well as offering to partially buyout Dell with funding from Icahn Enterprises at a price that was modestly higher than the final Silver Lake Partners/Michael Dell bid of $13.75. Icahn argued tirelessly that Dell was being undervalued in this deal, but Dell's board made it nearly impossible for dissenters to block the deal, with the leveraged-buyout vote postponed on two separate occasions.

Ultimately, Dell purchased a company that was rich in cash, profitable, and slowly building an IT-infrastructure business for what could be quite the bargain while most long-term shareholders wound up on the losing end.

Stay tuned, as next week we'll reveal our best and worst CEOs of the year!

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