The Motley Fool's Best CEO of the Year Is...

It's that time of the year again, folks! It's time to dust off the cyber awards and crown five CEOs with the prestigious honor of being the best of the best 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 best CEOs of the year than I could have come up with by myself.

Over the previous four weeks we've chronicled a number of CEOs who would certainly be very deserving of the CEO of the year title. They are:

Today, though, we're crowning the creme de la creme -- our best CEO of the year. After aggregating the votes of my fellow coworkers, that title belongs to none other than Reed Hastings, CEO of streaming content provider Netflix (NASDAQ: NFLX  ) .

Reed Hastings, Source: Netflix.

Why Reed Hastings?
Thank goodness investors have an incredibly short-term memory span because just two years ago Hastings was practically the goat of all goats. In 2011, he delivered a trio of gaffes that included trying to boost user prices by 60% without adding any addition value to the services offered, attempting to split its DVD business from its streaming business (a.k.a. the Qwikster debacle), and the issuance of nearly 3 million new shares of Netflix common stock after repurchasing 900,000 shares during the course of the year. In other words, it wasn't a banner year for Hastings. 

The good news is that every January 1 the calendar clicks over and gives everyone a fresh chance, including America's most important CEOs.

If anything defined Reed Hastings' tenure over the trailing year, it was his penchant for striking game-changing content deals for Netflix. Many, such as myself, had written off Netflix's ability to compete with Amazon.com (NASDAQ: AMZN  ) in terms of striking new content deals because it was at a serious cash-on-hand disadvantage relative to the e-tailing giant. Somehow, though, Netflix was able to leverage its growing subscriber network and cash to curry favor with some very in-demand networks.

In December 2012, Netflix hit the jackpot by striking a multiyear content deal with Disney (NYSE: DIS  ) , which allowed it instant access to Disney's library of movies and will make it the exclusive distributor of animated content beginning in 2016. This move pushes Netflix into the family setting and makes it a very affordable entertainment option for a good chunk of American households.

In addition to Disney, Netflix has struck content deals with (breathes deeply...) DreamWorks Animation, the Cartoon Network, Sony, Weinstein & Co., NBC Universal Television in Canada, Virgin Media, Nokia, and Time Warner just in the past 12 months! That alone is worthy of "CEO of the year" nomination!

Netflix has also been a pioneer in focusing its efforts almost entirely on content streaming, especially overseas in an effort to keep ahead of Amazon.com, which has begun pushing into Europe with its streaming business. In 2011, everyone gave the company heat for putting its DVD business on the back burner and crushing its margin potential in favor of putting most of its energy and investments behind its streaming content operations. That strategy is now paying amazing dividends with more than 40 million members now in the streaming network, of which 38 million are paying. International growth has really been the source of Netflix's most recent surge, with revenue exploding from $78 million in the third quarter of 2012 to a forecast calling for $217 million in its upcoming fourth-quarter results. Total membership has also increased from 4.3 million to a projected 10.5 million in just five quarters. 

On the other side of the coin, we have Outerwall (NASDAQ: OUTR  ) , which is clinging to the DVD business like it's a gold mine when in reality it may be nothing more than fool's gold. For years, the owner of RedBox rental kiosks has been adding kiosks and saturating the domestic market that Netflix is fairly content to have left behind. Not surprisingly, despite these new kiosks, Outerwall has struggled to grow its top line as DVD sales slip in favor of convenient and equally cheap monthly streaming options offered by Netflix. Outerwall struck a deal with Verizon (NYSE: VZ  ) to offer its own monthly streaming content service, but I'd say that deal might be a little too late to make a significant impact.

Finally, Netflix simply outperformed every single S&P 500 stock in 2013 -- period! Year to date, Netflix shares are up 284% compared to 265% for Micron Technology and Best Buy up 257%. Since the end of September 2012, shareholders have been rewarded with a 553% gain, or an average monthly gain of 13.3%. This proved more than enough to persuade me and fellow Fools Selena Maranjian and Jeremy Bowman to select Hastings as our top CEO of the year.

Here's how this trillion-dollar opportunity could make you a bundle
Television, as we know it, is on the verge of a transformation. The companies that prevail in this epic disruption could go on to earn their shareholders untold sums of money. And the companies that lose could very well end up in bankruptcy court within a matter of years. With this in mind, our top technology analysts created a groundbreaking free report that sorts out the likely winners from the losers. In doing so, they reveal the handful of companies that are best positioned to make their shareholders exceptionally rich over the next few decades. To download this invaluable free report before the rest of the market catches on, simply click here now.


Read/Post Comments (3) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 10, 2013, at 8:10 PM, duuude1 wrote:

    And not only did Reed and Netflix accomplish all those content deals, but he's flown past HBO's US subscribers, thoroughly trashed HBO's online-only efforts in a head-to-head in Sweden, far exceeded the negative TV subscriber growth of almost all the cable operators...

    BUT he's also recognized and developed incredible talents like Chief Content Officer Ted Sarandos on the one hand, and on the other like Cloud Architect Adrian Cockcroft, whose team has taken the rather basic infrastructure of Amazon's AWS and forged it into a useable platform for content delivery, and open-sourced many of those software tools for other cloud users....

    AND fostered an environment where customer service like this becomes an internet meme:

    http://venturebeat.com/2013/10/11/awesome-netflix-customer-s...

    OK, ok, I guess I'm kinda in agreement with you duuudes on your pick for best CEO, this time around.

    Great pick!

    Duuude1

  • Report this Comment On December 12, 2013, at 11:19 AM, Mathman6577 wrote:

    I'd put him in the top ten for sure.

  • Report this Comment On December 12, 2013, at 11:41 AM, SkepikI wrote:

    For a wonder, I can fault neither your logic nor your selections. Personally I'd rate Mulally better, but 5 is certainly ballpark. And watch results for 2014 at F. Inertia is the under appreciated quality that many Investments exhibit.

    Even more interested in the worst picks on the theory the tide is rising and you have to be uniquely unsuited to be a CEO if you are flubbing it now. Its just challenging enough to reveal talent (or lack thereof)

Add your comment.

DocumentId: 2758587, ~/Articles/ArticleHandler.aspx, 7/29/2014 7:20:20 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement