Inditex Chief Tops HBR's List of Best-Performing CEOs
Harvard Business Review released its annual list of the 100 best-performing CEOs and this year’s top performer is Pablo Isla, head of Spanish retailer Inditex, best known for its flagship fashion brand Zara.
The list, which appears in HBR’s November-December issue, is different from other leader rankings in that it measures performance for the entire length of a chief executive’s tenure.
“We think it’s important to recognize leaders who are delivering strong financial performance and creating sustainable businesses over the long term – not just quarter to quarter,” said HBR editor in chief Adi Ignatius.
Isla, who ranked #3 in last year’s list, has led Inditex on a global expansion since becoming CEO in 2005, increasing its market value sevenfold and making it Spain’s most valuable company. Today the company’s eight brands have 7,300 stores in 93 countries.
Measured on financial returns alone, Isla comes in #18 in the ranking. But Inditex’s strong environmental, social, and governance (ESG) performance, which makes up 20 percent of each CEO’s ranking, propelled him to the top spot.
In an interview with HBR, Isla discusses some of the factors — a flat structure and an informal management style; “proximity sourcing,” or production close to home; and a continual focus on sustainability —that have contributed to Inditex’s success.
Amazon CEO Jeff Bezos, who dropped from #1 to #87 in 2015 when ESG ratings became a factor in the HBR ranking, is now in the #71 spot. On the purely financial metrics, he still leads all other CEOs.
To compile the list, HBR looked at CEOs of the S&P Global 1200 as of April 30, 2017, and calculated overall shareholder return and increase in market capitalization over their entire tenure. It also factored in two separate ratings of corporate ESG performance. (Read more about the methodology.)
2017 ranking statistics:
- On average, the world’s 100 best CEOs have generated a 2,507 percent overall return on their stock (adjusted for exchange-rate effects), for a 21 percent annual return.
- Eight of the top 10 CEOs run European companies.
- 32 CEOs on the list have an engineering degree and 29 have an MBA.
- On average, they became CEO at age 44 and have been in office 17 years.
- For the second year in a row, Marillyn Hewson of Lockheed Martin and Debra Cafaro of Ventas are the only women on the list – reflecting the persistent underrepresentation of women at the top.
Previous rankings of the world’s best-performing CEOs were published in HBR’s January-February 2010, January-February 2013, November 2014, November 2015, and November 2016 issues.