Mad Money

The 'Mad Money' wall of shame—Jim Cramer's CEOs destroying shareholder value

Source: CNBC

In the past 10 years, Jim Cramer has reiterated the fact that the CEO running a company can determine the direction of the stock. However, sometimes the top exec can turn a company into deadwood and run it into the ground, too. When that happens, the "Mad Money" host has no choice but to commit the CEO to the dreaded "Mad Money" wall of shame.

Cramer considers them to be the "Rogue gallery of incompetent, value destroying chief executives who could cause their stocks to rally simply by stepping down."

Here is a look at some of the executives who disgusted Cramer to the point of commitment to the wall, including his most recent CEO addition, who he says caused major shareholder destruction.

by Abigail Stevenson, last published May 26, 2016

Michael Ferro, Chairman at Tribune Publishing Co

Michael Ferro, Chairman at Tribune Publishing Co
Patrick T. Fallon | Bloomberg | Getty Images

The most recent executive to drop the ball was Michael Ferro, the chairman of Tribune Publishing. This is the same company that owns the L.A. Times and the Chicago Tribune, along with 9 other daily papers and 160 weekly or monthly publications.

One month ago, Gannett offered to buy Tribune Publishing for $12.25 a share, which would be a 63 percent premium to where the stock was trading versus the previous trading day. 

This was a huge premium for an ailing newspaper business, but Tribune said no. Cramer suspects that Ferro wanted the company to remain as an "independent fiefdom." Then a little over a week ago, Gannett returned with an offer to pay $15 share, a huge deal. Again, Tribune said no.

"That is one of the biggest takeover premiums I can ever recall, but Ferro has been fighting this deal tooth and nail in a ridiculous manner, and I think he needs to be called out for it," Cramer said.

Ferro himself bought 16 percent of Tribune Publishing at $8.50 in early February, so accepting Gannett's offer would have given him a 76 percent gain. But that is the problem. Cramer has found that often wealthy guys like Ferro will buy a newspaper as a vanity project, but then refuse to buy Tribune Publishing wholesale or sell it to anyone else.

"If you are going to be the chairman of the board at publicly held company, you have a duty to your shareholders. But by aggressively rejecting two increasingly generous takeover offers from Gannett, Ferro has destroyed all value, all so that Tribune can remain his own independent plaything," Cramer said.

Art Coppola, CEO of Macerich Co

Macerich Chairman and CEO Art Coppola speaks at the Milken Institute State of the State conference in Los Angeles.
Armando Arorizo | Bloomberg | Getty Images

Art Coppola is the CEO of the mall real estate investment trust Macerich. Cramer was flabbergasted when Coppola did a huge disservice to shareholders by turning down a beautiful takeover bid from the largest REIT in the country, Simon Property Group.

As a result, Macerich's stock has been slammed by angry shareholders. Cramer considers this horrible decision by Coppola to be a textbook example of how not to run a company.

In the following months, Simon Property Group desperately tried to acquire Macerich. Simon initially offered the company $91 per share, which is generous, considering it was only trading at $70. Simon then raised its bid to $95.50 and Coppola still refused, claiming the bid undervalued Macerich.

"This was the point where Coppola should have said yes, because there comes a time when you need to just take the money and run, Steve Miller style," the "Mad Money" host said.

Cramer rarely sees such a blatant situation where a CEO clearly just made the wrong decision. What a foolish move!

Everyone makes mistakes sometimes, but Coppola really took the cake on this one. In Cramer's perspective, he deliberately decided not to make shareholders money by killing a fabulous takeover bid. For that act of value destruction, he has now officially been added to the "Mad Money" wall of shame.

Wes Edens, co-chairman of Fortress Investment Group

Wes Edens
Getty Images

This wall of shame veteran made the wall on Dec. 18, 2009, after a vacancy was created when C. Dowd Ritter stepped down as CEO of Regions Bank. As a result Cramer picked Wes Edens, the co-chairman of Fortress Investment Group, to fill the vacancy. Cramer pointed out that Edens was guilty of "wrecking shareholder value" when Fortress announced that it would not be paying a dividend for the sixth consecutive quarter. 

This exec has remained on the wall of shame for more than five years now. The stock has declined more than 58 percent from its high, and yet the "Mad Money" host still can't figure out what Fortress actually does. "Fortress is everywhere you don't want to be," he added.

George Economou, chairman, president & CEO of DryShips

George Economou
Joerg Koch | AP

Another veteran of the wall of shame is George Economou, CEO of DryShips. Cramer added this disgraced CEO to the wall of shame on June 24, 2010. Economou took the company public in 2005 when the stock was trading at $20.20 and as of Thursday, it closed at just $2 a share. Wowzer!

Cramer previously attributed the reason for the stock to plummet, because of Economou's leadership that allowed the company to pay up for new ships instead of waiting for better pricing.

One qualification of a CEO landing on the wall of shame is that the stock could have performed better if the CEO was not steering the ship. Cramer thinks that this is clearly the case with Economou, thus he still continues to stay on the wall of shame.