http://www.marketwatch.com/news/sto...x?guid={28A849CF-A79F-4D6F-9568-6B0A2D37E471} SAN DIEGO (MarketWatch) -- The winner of this year's Worst CEO of the Year, awarded annually by this column, isn't a CEO at all, but might as well be: Sears Holdings Chairman Eddie Lampert, who is highly regarded by many on Wall Street for delivering a steady stream of super-sized returns as head of ESL Investments. If it's any consolation, Lampert didn't win by a landslide. There were simply so many excellent contenders and reader nominations that it was hard to choose. Some, like Chuck Prince, formerly of Citigroup, and Ed Zander , of Motorola, are out of their jobs, which takes them out of the running. Also on the list until Wednesday was Peter van Stolk of Jones Soda, an entrepreneur who appeared to be in well over his head as his company attempts a transition to the big time. However, like Zander, he has agreed to leave his job by year-end. Then there are those like Angelo Mozilo of Countrywide Financial, the most obvious choice to many readers. By his company's sheer size, he has become the poster child for a mortgage market gone wild. However, aside from ill-timed stock sales as his company was buying back stock, which if nothing else looked bad and Countrywide's aggressive push into subprime loans at the wrong time it's hard to single out Mozilo. Why, for example, shouldn't it be Kerry Killinger of Washington Mutual, whose company is loaded with subprime, option arms and home equity lines and loans in some of the hardest-hit housing hotspots? Or Jimmy Cayne of Bear Stearns, whose firm took on more than a few bad mortgage-related investments? Or Scott Hartman, of subprime lender NovaStar, whose company is about to be booted off the New York Stock Exchange to the bulletin board while on life support? Away from financial services, Mesa Air's Jonathan Ornstein received the most write-in votes by employees, investors and employees of competitors. (It was an impressive, concerted campaign.) Not only does the company suffer the lowest margins and boast the worst-performing stock among regional airlines, with "skyrocketing" pilot attrition (per an Air Line Pilots Association press release), but it recently was embarrassed after a judge ruled that Mesa must pay $80 million to Hawaiian Air for using confidential, proprietary information to start its inter-island Hawaiian competitor, "go!" (Mesa says it plans to appeal.) Others on the list include: Phil Schoonover of Circuit City, whose stock is down nearly 70% this year as he tries to turn the company around; so far, financial results suggest the turnaround isn't working as several top executives, including one who was recently promoted, have fled; Jim Tobin of Boston Scientific, whose dismal stock performance is a throwback to the pre-merger Lucent; Daryl Brewster of Krispy Kreme, who seems to be dreaming the impossible sugar-coated dream, and (last but not least) Overstock.com's Patrick Byrne back for his third consecutive year - as his company continues to struggle (despite a remarkably resilient stock.) Then there's Lampert, who pre-Sears and Kmart could have won "investment manager of the year" many times over. This award is nothing personal. I'm among those who thought ESL's purchase of Citigroup shares earlier this year was a no-brainer. But Sears has put him in a position to be judged differently. Last week, after Sears reported yet another dismal quarter, I suggested in my blog that maybe the worst CEO should be Sears CEO Aylwin Lewis, whose concedes quarter after quarter that the company needs to do a better job. "To be fair," commented hedge fund manager Jeff Matthews of Ram Partners, "he doesn't have much to work with." Matthews was right. While it's technically Lewis' show, how can he turn around the company, as CEO, when the capital decisions aren't his? (Answer: He can't.) Sears Eddie Lampert, whose quarterly letters to shareholders, which turned annual last March, reflect vision for the company. My skepticism of the Sears turnaround is nothing new and, truth be told, I was a skeptic of the JCPenney, turnaround, as well. (And wrong, I might add.) The difference is that Penney was being run by a skilled merchant who had turned around multiple retailers. It has since become place where middle America shops. By contrast, Sears is being run by Lampert and Lewis - a hedge fund operator and former executive of YUM! Brands, which is restaurants, not pure retail certainly not retail in the vein of Sears. Lampert's mantra has been profits over sales, which makes sense if it works. As recently as March, in his shareholder letter, he suggested better times were imminent when he said, "We believe we have stabilized Kmart's Ebitda and are now in a position to grow from that base." But retailers, especially those trying to improve themselves, require considerable capital infusions to drive sales. So far, for all of Sears, including Kmart, the strategy has failed miserably. Not only have same-store sales (which Lampert says are "overrated" as a metric) gone deeper into the red, but gross margins, Ebitda and operating income for Kmart are also going in the wrong direction. While all of this is going on, from out of the blue Sears emerged as a bidder to buy Restoration Hardware, which despite long-time efforts to turn itself around remains a troubled retailer. Investors, meanwhile, keep talking about Sears, somehow as an asset play. Maybe one day it will be, but until then it's still largely a retailer. On that score, it's doing so poorly that following the most recent earnings, analyst Gary Balter of Credit Suisse, a long-time fan of the Sears story, told clients, "Unfortunately, visits to the stores show very little evidence that Mr. Lampert has figured out the magic sauce that makes good retailers profitable and we doubt that we will see that in the near and medium term." Hardly a ringing endorsement. The silver lining, if you can call it that, is that unlike all prior winners all of whom are no longer in their jobs job security at Sears is the last thing Lampert has to worry about. End of Story
(1) Is he wearing a Sears suit in that photo? (2) The "magic sauce" is a bull market in commercial real estate.