When it comes to creating value, Occidental Petroleum Corp. Chief Executive Stephen I. Chazen beats out other Southern California business leaders, according to a new report from Pepperdine University.
Chazen helped his Los Angeles company pull in $3.4 billion in so-called economic profit in 2011, an increase of $1.6 billion from 2010, according to the self-funded report from the university’s Graziadio School of Business and Management along with management consultant SCCO International.
Pepperdine researchers calculated economic profit for each chief executive by measuring the company’s after-tax profit compared with its capital cost. Of the 100 bosses on the list, 58 ended up with a positive rate.
Occidental also grew its revenues more than 25% to $24.1 billion and income by nearly 40% to $7 billion.
The second-best performer was Thousand Oaks biotech giant Amgen Inc., which earned $3.2 billion in economic profit last year. Other top 10 companies included Walt Disney Co., Mattel Inc. and Activision Blizzard Inc.
In the bottom 10: Skechers USA Inc., Pacific Sunwear of California Inc., KB Home and Live Nation Entertainment Inc.
The report also compiled a separate ranking based on value spread: the difference between a company’s return on and cost of capital.
Here, Rodney Sacks of Monster Beverage Co. was on top, with a 171% spread and a three-year average of 143%. The Corona energy drink company’s stock has nearly doubled in the last 52 weeks.
Only two companies made both lists -- San Diego chipmaker Qualcomm Inc. and Los Angeles nutritional supplement purveyor Herbalife Ltd., whose shares fell this week after awkward questions posed on a conference call with analysts.
Study authors suggested that how a company performs isn’t always based on what industry it’s in, but rather, on leadership and strategy differences.
“A company can have a great idea or product, but without the right strategy and leadership they may not create value,” said co-author and associate finance professor John Paglia. “Securing capital and using it wisely are absolutely pivotal for companies to maximize value for shareholders.”
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