Who was the best CEO of 2023?

Iit was a tough year at the top of the corporate ladder. Sluggish growth in many markets has left bosses scrambling to control costs, just as inflation has prompted their workers to demand big pay rises. Conflicting geopolitics and toxic culture wars have left business leaders feeling like tightrope walkers. The craze for generative artificial intelligence (AI) also worried them about an imminent technological breakthrough.

Yet for some leaders, 2023 was a vintage year. To determine who was most successful, The Economist examined the performance of the bosses of large listed companies in the S&P. Index 1200, which covers most major economies except China and India. We set aside those who have been in office for less than three years, to avoid giving too much credit to the replacement of an incompetent predecessor. We then ranked the other executives based on the returns they generated for shareholders relative to their industry average. The top ten by this measure included both household names and relative dark horses.

Among the top ten were the heads of two companies – Cameco, a Canadian mining company, and PulteGroup, an American home builder – whose strong results were mainly due to macroeconomic forces (respectively a surge in uranium prices and a collapse in sales of existing homes). We left them aside. Also on the list were the heads of two buyout companies, 3i and Melrose Industries, whose results reflect more the performance of the bosses managing their portfolio companies than the financiers at the top. We also excluded them. Finally, we also removed Richard Blickman from BE Semiconductor Industries, a Dutch manufacturer of chip manufacturing tools. His compensation was rejected by shareholders, which is not a good idea for a CEO.

image: The Economist

This leaves us with a shortlist of five superstar CEOs for 2023 (see table). In ascending order of shareholder returns, they are: David Ricks of Eli Lilly, now the most valuable pharmaceutical company in the world; David Vélez Osorno of Nubank, a Brazilian neobank that is gobbling up clients across Latin America; Sekiya Kazuma of Disco, a Japanese manufacturer of advanced tools for semiconductor production; Mark Zuckerberg of social media giant Meta; and Jensen Huang of Nvidia, a chipmaker whose market value topped $1 trillion this year.

During the holiday season, all five can bask in the warm glow of having generated enormous shareholder value. But who had the best year of all?

A case can be defended for any of the five cases. Mr. Ricks put Eli Lilly on the heels of Novo Nordisk, a Danish rival, in the booming market for anti-obesity drugs and oversaw extraordinary results in a very ordinary year for the industry. Few neobanks have succeeded in dislodging well-established historical players. Yet under Mr. Vélez's leadership, Nubank, which he co-founded in 2013, has become the fifth-largest financial institution in Latin America by number of customers. Mr. Kazuma, who also heads Disco's research and development division, has kept his company on the frontier of semiconductor cutting and grinding for many years. After terrifying investors in 2022 with his descent into metaverse madness, Mr. Zuckerberg delighted them in 2023 with his “year of efficiency” and his company's forays into the generative realm. AI. And Mr. Huang has solidified his company's position as an indispensable supplier of the chips that power the AI revolution.

How then to choose? One solution is to listen to subordinates. After all, a CEO who drives up the stock price but angers staff is unlikely to be successful for long. We gathered numbers from Glassdoor, an employee review website, on what workers at the five companies think of their leaders and their companies in general.

At just 62%, Mr. Zuckerberg's approval rating is a clear outlier, suggesting that his “year of efficiency” has been as horrible as it seems to employees. Disco employee satisfaction also appears low (although with fewer respondents). One explanation could be the strange work coordination mechanism put in place by the company. Teams use a virtual currency called Will to pay themselves for providing services. Managers then distribute currency to team members for completing tasks, which determines bonuses. This all sounds like an economist's dream, but hardly collegial.

Angering customers is also an unwise strategy for managers. This year, several US states, including California, sued Eli Lilly, among others, for allegedly overcharging for insulin, an essential medication for diabetics. The company's decision in March to cut insulin prices by 70% did little to quell the anger. (The company has rejected what it describes as the “false allegations” in the California lawsuit.)

As for Mr. Vélez, not all of his strategies are bearing fruit. Although Nubank is profitable overall, a result that has eluded many of its peers elsewhere, it is losing money in Mexico, where its approach to targeting the unbanked is proving costly. If Mr. Vélez succeeds, he could win the prize in years to come.

So Mr. Huang wins. Few bosses have been so far-sighted in betting on AI as head of Nvidia. More than a decade ago, Mr. Huang realized that the graphics processing units produced by his company were also effective for training. AI models. In the years that followed, he prepared Nvidia for the AI wave by investing in a proprietary software platform, CUDA, to help developers use its chips and by acquiring Mellanox, a networking technology provider that connects many chips together to provide greater processing power. The outcome of these bets now becomes clear; Nvidia controls more than 80% of the specialist market AI fleas.

Mr. Huang, whose iconic leather jacket has become as integral to his public persona as the turtlenecks sported by Steve Jobs, apparently shares the Apple founder's intensity and demanding standards. He is nonetheless beloved by staff, with a 98% approval rating. All things considered, he had the best 2023 of all.

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