If there was ever one unwritten rule in the high powered world of CEOs, it would be this: never, never, never tell them what you really think.
I mean think about it, how many CEOs of companies in troubled industries have gone on TV and bragged about how strong and vibrant their companies were only weeks before they went belly up?
The answer, of course, is all of them. That’s because when it comes to the guys in the huge corner offices, wearing the mask in the face of real adversity is as natural as a lunch trip on a private jet.
After all, that’s why CEOs make the big bucks–it’s their job to inspire confidence.
So when a CEO slips and lets forth a moment of real candor, it’s enough to turn a lot of heads and raise a lot of eyebrows.
But that’s exactly what happened back in March when Donald Tomnitz let loose with a rare fit of honesty. Tomintz is the CEO of D R Horton, Inc. (NYSE:DHI), the nation’s largest home builder.
"I don’t want to be too sophisticated here", Tomnitz told a group of investors, "but ’07 is going to suck, all 12 months of the calendar year."
Suck? Wow. When I heard those words I practically fell off my chair.
That’s because as someone that surely knows the "real" facts about the housing market, Tomnitz had the nerve to tell the absolute truth.
It was like the kid telling the emperor that he has no clothes and it was nothing short of stunning.
That’s why as we head into last days of 2007 that I’ve selected Mr. Tomnitz as my Daily Ration CEO Of the Year.
Because not only was he brutally honest in his assessment of the housing market, he was dead on accurate with his prediction-2007 really did suck.
And for that he has taken the top honor, narrowly beating out Angelo Mozilo, who turned in a banner year with the timing and volume of his insider sales.
As for 2008….well it’s not really looking much better for the builders. Today’s new home sales report was off the charts awful.
From the AP by Jeannine Aversa entitled: New Home Sales Plunge by 9 Percent.
"Sales of new homes plunged last month to their lowest level in more than 12 years, a grim testament to the problems plaguing the housing sector.
The Commerce Department reported Friday that new-home sales tumbled by 9 percent in November from October to a seasonally adjusted annual rate of 647,000.
That was the worst showing since April 1995, when the pace of sales was 621,000.
The sales pace for November was much weaker than economists were expecting. They were predicting sales in the weakest sector of the economy to drop by around 1.8 percent, to a pace of 715,000.
New-home sales dropped by 19.3 percent in the Northeast. They plunged by 27.6 percent in the Midwest and they fell by 6.4 percent in the South. However, sales increased by 4 percent in the West.
Over the last 12 months, new-home sales nationwide have tumbled by 34.4 percent, the biggest annual slide since early 1991, and stark evidence of the painful collapse in the once high-flying housing market."
Down 34.4% year over year? Ouch.
And to think those numbers don’t even reflect the cancellation rates which are running north of 30% in some areas.
But don’t bother to shed a tear for Mr. Tomnitz. In addition to being chosen as my CEO of the year, he earned a $1.6 million dollar bonus this year.
That’s on top of the cash bonuses he received of $12.1 million in 2006, $12.8 million in 2005 and $8.3 million in 2004 when the housing markets didn’t suck.
Nice job Mr. Tomnitz.
