Taking care of business: America's embattled CEOs seek solace on the golf course—where they call the shots and play to win

Golf Digest, Sept, 2002 by Lisa Furlong

A lot of Scott McNealy's numbers have been going down recently. According to Business Week his compensation dropped by 91 percent last year, Forbes says his net worth fell by $1 billion, and at press time the stock of his empire, Sun Microsystems, stood at less than $5--a tiny fraction of what it was during those long-gone dot-com glory days. But on the bright side, McNealy has seen his USGA Handicap Index plummet, too, from 3.3 to 0.3 since our last biennial CEO ranking. ("I hate my handicap where it is right now," says McNealy. "I can't make any money.")

McNealy is our No. 1 CEO golfer for the third time running, having topped the list in 1998 with a 3.2 index (beating out the then CEO of General Electric, Jack Welch, by a whisker), and again in 2000. Thanks to McNealy's marked improvement, this time he leads comfortably over No. 2-ranked Curt Culver of MGIC Investment (2.9) and No. 3 William (Jerry) Jurgensen of Nationwide (3.8). The ranking (which appears on pages 177-178) comprises the top 200 CEO golfers in America who head either a Fortune 500 or Standard & Poor's 500 publicly traded company.

Fifty-four of the Golf Digest 200 have single-digit handicaps; to make the top 200 a CEO had to have an index of no higher than 18.3. The 70 CEO golfers who didn't make the cut include Norman H. Wesley of Fortune Brands, parent company of Titleist (18.6), master investor and Berkshire Hathaway CEO Warren Buffett (21.4), and J. Barry Griswell of Principal Financial, who just took up the game--"it looks a lot easier on television," he says--and who rounds out the complete list with a 35.1 index. (For the full ranking and alphabetical breakdowns by CEO or company name, visit www.golfdigest.com/CEO.)

Post Enron, the integrity of CEOs is being assaulted virtually everywhere (a recent Starwood Hotels survey concluded that 82 percent of America's business executives cheat at golf). But the CEOs on our list point to golf as a litmus test of honesty. "No mulligans--ever," says Steve Bennett of Intuit, ranked No. 4 with a 4.6 index. Ninth-ranked David Thomas of IMS Health, a 5.3, even questions putts being conceded. "If a putt is such a given, then make it," he says.

While many CEOs on our list say they have encountered artificially inflated handicaps--10-handicap Charles Fote of First Data concedes that golf and business have taught him that "not all people know how to count"--vanity handicaps that are too low are rare, they say.

For McNealy this is certainly true. His teacher, Jim Gerber, who is largely responsible for McNealy's improvement over the past two years, says the tech titan's handicap could be lower still if he had more time for golf--something not likely to happen for an executive widely viewed as the voice of Silicon Valley. Besides business demands there is McNealy's addiction to amateur hockey (he plays on five teams--at 9 or 10 p.m., he hastens to explain) and four young children, the oldest of whom, at age 6, is already shooting 150 for 18 holes.

McNealy achieved one goal when he finished as "Most Valuable Amateur" in the 2001 AT&T Pebble Beach Pro-Am (18 CEOs on our list played in it this year) by contributing 35 strokes to Jesper Parnevik's team score. McNealy jokingly laments not giving up his amateur status so he could claim the $8,000 prize for finishing fifth in the 2001 Sun Microsystems-sponsored John Elway CPT Classic in Colorado (this year he finished tied for 12th, passing up $3,400 and beating Elway by a shot). One goal remains: McNealy made it to the final in June, but he has yet to win the club championship at his home course, Sharon Heights in Menlo Park, Calif.

McNealy scoffs at those who criticize CEOs for playing--or playing too much. "There have to be better things to beat up on us for than golf," he says.

But the question remains: Should investors agitated by recent corporate disclosures be concerned if the CEO of a company whose stock they own appears high on our list?

"I make no apologies for being a CEO who loves golf," says 6-handicap and No. 13-ranked David Novak of Yum! Brands, parent company of the likes of Taco Bell and Kentucky Fried Chicken. "With the hours I put in, I don't think anyone should be worrying about my taking four hours to play."

While it may be capricious to try to correlate low CEO handicaps with good stock performances (as a story in The New York Times did following our inaugural rankings in 1998), it should be noted that all but tech stocks Sun and Intuit of the companies managed by our top-10 CEOs have made positive strides in the stock market since our last rankings, and Intuit is not only up in this tumultuous calendar year but also touted as a top stock by several analysts.

Mike McCallister, the CEO of Humana whose 4.8 index puts him fifth on the Golf Digest list, says: "I know I'll be getting e-mails from people who think my handicap is too low." But Humana returned 50 percent to investors in the first half of 2002. Cardinal Health CEO Bob Walter also sports a 4.8 handicap, and although the company's market performance has declined recently, Walter led the company to a 100 percent stock increase and a 3-for-2 split since he appeared at No. 2 in our 2000 rankings as a 3.6. Dillard's, headed by No. 12 Bill Dillard, another single-digit CEO, was the second-best performing stock in the S&P 500 as we went to press (behind Big Lots Inc., whose CEO Michael Potter debuts on our list at 11.0).