This story is part of a special series by TheStreet.com investigating shareholders' reaction to corporate corruption on Wall Street.
In looking for the new Mr. or Ms. Good CEO, experts fret that in their disgust, Wall Street watchers will construct a new set of criteria that is as restrictive as the 1990s were permissive. "The debate is being framed around the bad apples," Harvard professor Rakesh Khurana says. "Companies may conclude, 'Instead of hiring b-school students, we should hire divinity students.'"
The proof, as they say, is still in the pudding. Instead of relying on intangibles, TheStreet.com took a performance-first approach to find seven entries for a Good CEO Portfolio. We screened for companies that have outperformed the broader market in several key areas: earnings, revenue and share-price growth over five and 10 years, as well as market-beating return on equity. Our screen turned up 97 companies -- and the results were interesting.
What did we find? First, a sector anomaly: The past 10 years have witnessed an unprecedented housing boom, which resulted in nearly a dozen homebuilding and mortgage-related companies turning up on the list. This decade-long boom lifted all boats, so we'll demur on choosing a CEO from this group -- the next five years will surely separate the skilled from the lucky.The remaining companies represented a broad cross-section of sectors and market caps. However, unifying themes emerged: The majority are run by founders, scions of founders or people who worked their way up from the inside. The CEOs tended to have longer tenures. With a few notable exceptions, the list was free of high-profile CEOs. The companies also shared a disciplined culture that promoted from within -- supporting the findings of Jim Collins, author of "Built to Last" and "Good to Great." In winnowing our Good CEO Portfolio down to seven, we only included companies in which the CEO was at the helm for at least five years. That excluded many well-run companies that passed our performance screen -- including Amgen (AMGN), AutoZone (AZO), Best Buy (BBY), Fiserv (FISV), Johnson Controls (JCI), Microsoft (MSFT), SunGard (SDS), Timberland (TBL).