The CEO 100: The Best-Performing CEOs in the World, 2019

When Jensen Huang cofounded NVIDIA, in 1993, he focused on a single niche: building powerful computer chips to create graphics for fast-moving video games. As the company went public in 1999 and grew through the 2000s, video games remained its growth engine — but even back then, Huang, a Taiwanese immigrant who studied electrical engineering at Oregon State and Stanford, could see a different path forward. Data scientists were beginning to ask computers to perform much more sophisticated calculations more quickly, so NVIDIA began spending billions of dollars on research and development to create chips that would support artificial intelligence

Huang is a new face at #1, but he's no newcomer to the list: He ranked #2 in 2018 and #3 in 2017. (Last year's top performer, Pablo Isla, of the Spanish retailer Inditex, moved from CEO to chairman, taking him out of consideration for 2019.) That consistency is typical of our list. Unlike rankings that are based on subjective evaluations or short-term metrics, it relies on objective performance measures over a chief executive's entire tenure — and these "career numbers" tend to hold steady. It's no surprise, then, that 65 of last year's CEOs reappear this year.

They do so despite a change in our methodology. Since 2015 our ranking has been based not only on financial performance but also on environmental, social and governance (ESG) ratings. For the past four years we've weighted ESG scores to account for 20 per cent of each CEO's final ranking. This year we tweaked the formula, increasing that share to 30 per cent. The shift reflects the fact that a rapidly growing number of funds and individuals now focus on far more than bottom-line metrics when they make investment decisions. One sign of this changing sensibility: In August 2019, 181 US CEOs who are members of the Business Roundtable signed a statement affirming that the purpose of a corporation is to serve not just shareholders but four other groups of stakeholders: employees, customers, suppliers and communities.

The change in ESG weighting did create one casualty: Amazon CEO Jeff Bezos. On the basis of financial performance alone, Bezos has been the top CEO every year since 2014. However, he failed to make this year's list owing to Amazon's relatively low ESG scores. According to Sustainalytics, one of two ESG data firms that assist HBR with its ranking, those scores reflect risks created by working conditions and employment policies, data security and antitrust issues.

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As in past years, women are underrepresented among the 100 leaders. The 2019 list does bring a small measure of good news, however: Four female CEOs made the ranking (all are in the top half), up from three in 2018 and just two in prior years. Each year when HBR publishes this list, some readers protest the paucity of women; each year we respond by saying it's the result not of the performance of female CEOs but of how few women serve in the role — a phenomenon we, too, find regrettable.

The CEOs who appear in this year's list display remarkable longevity — and illustrate how happy boards are to allow a high-performing leader to stay in the job for many years. The CEOs of the S&P 500 have an average tenure of 7.2 years; in comparison, HBR's best-performing CEOs have been in the job 15 years, on average. (Our methodology, which excludes CEOs with less than two years' tenure, may be a factor in why that number is so high.)

(Keith Block became co-CEO in August 2018)

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(Stepped down August 1, 2019)

(Stepped down September 1, 2019)

(Stepped down September 11, 2019)

(Will step down January 5, 2020)

(Tie)

(Will step down February 1, 2020)

How we calculated the rankings

To compile our list of the world's best-performing CEOs, we began with the companies that at the end of 2018 were in the S&P Global 1200, an index that reflects 70 per cent of the world's stock market capitalisation and includes firms in North America, Europe, Asia, Latin America and Australia. We excluded CEOs who'd been in the job for less than two years to ensure that we had a sufficient track record to evaluate. We also omitted those who left office before July 31, 2019. All told, we ended up with 883 CEOs from 876 companies (several companies had co-CEOs) based in 29 countries.

Our research team was headed by Nana von Bernuth, an adjunct professor at INSEAD, with assistance from the coders Peggy Lam and Onorina Buneanu and the data consultants Morand Studer and Daniel Bernardes of Eleven Strategy. The team gathered each company's daily financial data, as compiled by Datastream and Worldscope, from the CEO's first day on the job until April 30, 2019. (For the handful of CEOs who took office before 1995, we calculated returns using a start date of January 1, 1995, because prior industry-adjusted returns were unavailable.) We then calculated three metrics for each CEO's tenure: the total shareholder return (including dividends reinvested) adjusted by country to offset any increase in return attributable merely to an improvement in the local stock market; the TSR adjusted by industry to offset any increase resulting from rising fortunes in the overall industry; and change in market capitalisation (adjusted for dividends, share issues and share repurchases), measured in inflation-adjusted US dollars.

We then ranked each CEO — from 1 (best) to 883 (worst) — on each financial metric and averaged the three rankings to obtain an overall financial rank. Incorporating three metrics is a balanced and robust approach: While country-adjusted and industry-adjusted returns risk being skewed toward smaller companies (it's easier to get large returns if you start from a small base), the change in market capitalisation is skewed toward larger companies.

To measure performance on nonfinancial issues, HBR consulted with Sustainalytics, a leading provider of environmental, social and governance (ESG) research and analytics that works primarily with financial institutions and asset managers. We also used CSRHub, which collects, aggregates and normalises more than 600 ESG data sources, including eight data sets from leading ESG research firms, and works mainly with companies that want to improve their ESG performance. We computed one ESG rank using Sustainalytics ratings and one using CSRHub ratings for every company in our data set. To calculate the final ranking, we combined the overall financial ranking (weighted at 70 per cent) and the two ESG rankings (weighted at 15 per cent each).

HBR's list of best-performing CEOs was conceived by Morten T. Hansen, Herminia Ibarra and Urs Peyer. Previous rankings were published in HBR in 2010, 2013 and each year since, but the methodology has changed several times during that span.

Written by: Harvard Business Review staff

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