Phillip Schoonover's performance as Circuit City Stores Inc (NYSE: CC) CEO has not been terrific. Last March he canned 3,400 of the highest paid people in the company -- many of which were top sales people who took their customers to Best Buy (NYSE: BBY). Circuit City's financial performance has faltered and its stock has lost 80% of its value in the last year.

As I posted here, I can't understand why Schoonover continues to occupy his position as CEO. A Circuit City spokesman denies a rumor I received this morning from an anonymous tip via e-mail suggesting that Circuit City's stockholders hounded the board into agreeing -- Schoonover will be out by the end of this month, the tipster alleges. Two e-mails from different addresses, which apparently were fake, contained the rumor. The senders didn't identify themselves. I called the company and the two executives mentioned in the e-mail for comment.

Here's one of the e-mails:

Is it better to invest in a company whose CEO is a star or a company that breeds generations of outstanding CEOs? If you think a star CEO is better, I have two stocks to consider -- but also one to avoid. And if you think a CEO breeding ground is better, one stock comes to mind.

Today, I appeared on CNBC's Squawk Box this morning with Yale's Jeff Sonnenfeld to give my picks for the three best and worst CEOs of 2007. Here are the three best CEOs along with the name of the company, the stock price performance over the last year, and my reasons:

• Steve Jobs of Apple Inc. (NASDAQ: AAPL) +144%. Successful iPhone introduction with a million units sold in its first 74 days (some estimate Apple will announce it's sold five million in mid-January) plus outstanding performance of Apple retail stores -- they account for 20% of Apple revenue and those revenues have grown 42% in the last year while the stores earn $4,000 per square foot -- much more than competitors. At a Price/Earnings to Growth (PEG) of 1.8 it remains to be seen whether Apple can grow enough to justify its P/E of 50.
• Warren Buffett of Berkshire Hathaway Inc. (NYSE: BRK.A) +28%. Berkshire's stock had a great year -- it has not done as well since 1998 when it rose 52%. Berkshire's return on equity is up from 11% in 2006 to almost 16% as of September. Berkshire is a safe haven stock and Buffett continues to find places to invest his $47 billion in cash. One caution -- Barron's thinks that Berkshire stock is 10% overvalued.
• Lloyd Blankfein of Goldman Sachs Group (NYSE: GS) +6%. Only firm to make money while peers lost billions -- its short position of the ABX index--which represents a basket of credit default swaps on mortgage-backed securities- yielded $4 billion in profit -- offsetting a $2 billion loss in its $10 billion CDO portfolios. I was impressed by the way Blankfein carried Goldman's culture of encouraging intellectual debate between lower-level traders and top executives to arrive at the best decisions. Goldman trades at a P/E of 8.6 and its earnings are expected to grow 4% next year. But that forecast is a real toss up so if you buy the stock, take a long term view.

Gallery: 2007's Best and Worst CEOs