Over the short term, say less than two or three years, the job performance of a CEO may have little influence on the performance of a company's stock. For example, Jeff Immelt of
, Sam Palmisano of
and Bob Nardelli of
are new CEOs of companies with relatively rich stocks.
Their stocks may underperform over the short term, but that doesn't mean there is a causal link between moves in their stock prices and their performance as CEOs. At each of these companies, there aren't a lot of valuation-enhancing levers to pull.
Over the long haul, though, the CEO's performance, principally in the area of capital allocation, has everything to do with the performance of the underlying equity. Over a period of many years, perhaps eight to 12 years on average, the typical CEO will allocate
of the company's capital. For this all-important function, most CEOs are ill-trained. CEOs generally come to the job with marketing and operational experience, not with capital-allocation experience.
In this column, I'll review a couple of CEOs who are "good to go" -- meaning that, based on their record of capital allocation, it would be good for shareholders if they went elsewhere.
To learn which executives are on Arne's list, please click here for a free trial to RealMoney. Once you sign up, you can read the rest of his column here -- and also access all of our premium content.
Arne Alsin is the founder and principal of Alsin Capital Management, an Oregon-based investment advisor specializing in turnaround situations. At time of publication, neither Alsin nor ACM held a position in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Alsin appreciates your feedback and invites you to send it to
to receive Arne's latest favorite stock picks from his newsletter, The Turnaround Report.