NEW YORK (
chief Craig Donohue won
's readers poll for
Worst-Performing Financial CEO of 2010
We were a bit surprised that Donohue beat out
boss Marc Stefanski, who
channeled his deceased parents
during the company's first-ever conference call with investors. It may be owing to the fact that CME Group had the largest market cap of any companies on our list, meaning more people were familiar with the company.
A CME Group spokeswoman declined to comment on the results of the poll.
Donohue can take some consolation in the fact that he won with a scant 20 votes, as not many readers of
voted in the poll. Maybe readers were disappointed to learn that
Bank of America
chief Brian Moynihan and
boss James Gorman got a pass, since both were in their first year in 2010.
chief Vikram Pandit, long a favorite reader punching bag, appeared to really turn things around in 2010, if Citigroup share performance is any indication.
Donohue's 20 votes put him ahead of
chief Dominic Frederico, who got 13 votes.
American National Insurance
chief Robert Moody and
boss Aubrey Patterson tied for third place with 12 votes each. Stefanski was right behind them with 11 votes.
Trained as an attorney, Donohue has run the giant Chicago futures exchange since the start of 2004. While CME shares have fared poorly over the past five years and one- and three-year returns aren't much to speak of, CME's stock nearly tripled in Donohue's first year at the helm. Now up four and a half times from where it was when he took over leadership of the company.
That said, since we did include CEOs in our poll who were in their first or second year at the helm, so why should we give credit to a CEO for the fact that the stock happened to triple while he was presumably too green to have had much to do with it?
CME spokeswoman Anita Liskey said Donohue was unavailable for an interview, but in an email Liskey argued that "the exchange sector crashed during the time frame you're reviewing." Relatedly, Liskey said investors have been assigning much lower multiples to exchange stocks than they had previously. She points out CME earned $3.60 per share in 2003 and is expected to earn $15.43 this year, according to analysts. As for compensation, Liskey wrote, "his contract was up last year so he was re-signed for 3 additional years. Not given a raise."
Donohue's pay of $4.73 million may seem like a lot to most of us, but considering that CME's market cap is three times that of
, where CEO Duncan Niederauer earned $7.27 million in 2009, you can be sure Donohue feels downright poor.
"The investment community views the CME management team in general-- and Craig Donohue is probably at the forefront of who they identify that management team with--I think they view them as a particularly experienced and kind of steady hand," says Ed Ditmire, analyst with Macquarie Research, adding "I wouldn't necessarily disagree."
Ditmire gives Donohue and CME chairman Terry Duffy high marks for leading consolidation in the exchange industry during their tenure, and for pushing for political reforms leading to increased electronic trading and improved transparency for investors.
However, Ditmire thinks the CME and leaders of other exchanges are vulnerable to criticism for not capitalizing on the migration of derivatives from private "over-the-counter" markets onto centralized trading and clearing platforms.
"People would have thought they'd have been able to develop meaningful businesses out of this over the counter clearing opportunity earlier and in a more profound way than we've seen to date," he says.
Written by Dan Freed in New York
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.