Schultz pips the likes of Facebook Founder Mark Zuckerberg and Apple CEO Tim Cook for the top honours.
The only Indian in the runners-up list is Ajay Banga, President and CEO, MasterCard, who is ranked at No 11. Banga, who has had a "stellar" career at Citigroup, took the top job at Mastercard last year.
"Today about a third of the world's credit cards bear the MasterCard brand, making it the second biggest card network after Visa. MasterCard has perhaps the strongest brand in its sector and its stock price is up 49.5 percent in the past year," Fortune said.
Fortune said it selected Schultz for the top honours for taking the company to new heights by posting record revenues and profits.
"Schultz distinguished himself in another way in 2011, taking steps to raise funds for job creation and to fight political dysfunction in Washington. The White House paid attention," the magazine said.
The first runner up is Jeffrey Bezos, Founder and CEO of Amazon, which has had a "blowout year, capped by the release of the Kindle Fire".
"Bezos stands out as an engaged, shareholder-friendly CEO (he owns 20 percent of the company but collects a small salary and no bonus). Amazon's international prospects seem bright given that more than half of all Internet users are now in developing markets," it said.
Zuckerberg, who has led Facebook to a "meteoric growth", is at No 6.
Fortune said the closely held company stands to rake in about USD 4.3 billion in sales this year, more than double the USD 2 billion that it tallied in 2010.
Zuckerberg is now battling archrival Google to dominate the social web and the rich advertising revenue potential that it represents.
The battle so far has mostly gone Facebook's way, Fortune said.
Apple CEO Tim Cook, who has been ranked 8th, spent his career at the technology giant toiling in the shadow of Steve Jobs.
"With Jobs now gone, Cook must show investors that he's more than just an able manager with special talent for running a global high-tech supply chain," Fortune said.
Cook inherits the world's most valuable technology company, which has huge growth opportunities in the smartphone market, the US publication said.
Google Co-Founder and CEO Larry Page has been ranked 14, followed by Berkshire Hathaway CEO Warren Buffett (16), Intel President and CEO Paul Otellini (27), Wal Mart chief Michael Duke (29) and Oracle Co-Founder and CEO Larry Ellison (46).
"From the euro mess to the Occupy Wall Street movement to the US unemployment crisis, 2011 was the kind of year that tests leaders," Fortune said.