Announcing Morningstar’s CEO of the Year Award Finalists

At Morningstar, we focus on identifying companies with sustainable competitive advantages, or moats, as we believe these types of businesses are the most likely to reward shareholders over the long run. But moats aren’t created or maintained in a vacuum; managers have a large part to play. As Berkshire Hathaway vice chairman Charlie Munger has succinctly stated, “The only duty of [the] corporate executive is to widen the moat.” With technological advances, an increasingly global marketplace, and the relentless nature of competition, the stewardship of a moat is not a simple task, and we believe assessing the quality of management is a critical step in analyzing any company. To highlight the importance of good management, each year we recognize one manager as the CEO of the Year.

Our stewardship methodology goes beyond basic corporate-governance practices and focuses on capital allocation and long-term value creation for shareholders. In assigning a stewardship rating, our analysts consider a company's investment strategy, history of investment timing and valuation, financial leverage, dividend and share-buyback policies, execution, management compensation, related-party transactions, and accounting practices. If we believe a management team has made exceptionally strong capital-allocation decisions and will continue to do so, we award an Exemplary stewardship rating. Less than 10% of our coverage earns this rating.

Our three finalists for CEO of the Year demonstrate the variety of ways that a manager can affect the moat surrounding a business. The first founded a disruptive business and built it over time into a wide-moat behemoth. The second embarked on a major reorganization that refocused the business on its core strengths. The third successfully steered his company through a very difficult industry period and built up its strength while many of its peers languished.

The first finalist is Jeff Bezos of

The second finalist is Jeffrey Immelt of

The third finalist is John Stumpf of

Congratulations to each of our CEO of the Year finalists. Morningstar will announce its 2015 CEO of the Year later this month.

Morningstar introduced its CEO of the Year award in January 2000. Winners are chosen by senior members of Morningstar’s equity analyst team based on their in-depth independent research. A complete list of past winners can be found here.