Archive for the ‘Quotable quotes’ Category

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Steady as she goes, IROs

August 16, 2011

A quote of the day for investor relations professionals, from National Investor Relations Institute President and CEO Jeff Morgan in his “IR Weekly” email and blog post under the heading “Market Mayhem”:

Market volatility reached new extremes last week as we experienced global market moves of positive to negative 5% from one day to the next. Most believe it is very unlikely these market moves were driven by fundamental analysis of companies, but instead by panic, margin calls and computerized trading. For IROs, these are the most challenging market conditions as they lack logic and rational explanation. Time and other actions outside our influence and control will bring markets back into check, as we continue to tell our story to investors.

I agree, although market mayhem may be more rational than we can see at the moment. However much we dislike “panic,” if the market performs horribly going forward, fear will seem logical in retrospect. Time will tell whether investors should “Hang on and weather the storm” or “Batten down the hatches and go to cash.”

Certainly for IR professionals, whose individual companies may be doing fine even as the market goes crazy, it’s sound advice to hold the wheel … steady as she goes.

© 2011 Johnson Strategic Communications Inc.

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A visit to the Buffett buffet

January 26, 2010

If you’ve wondered what the Berkhshire Hathaway annual meeting is like – from parties to steakhouses to sightseeing in Omaha to asking “the Oracle” a question, Mattathias Schwartz offers a first-timer’s view of the pilgrimage to capitalism in the January 2010 Harper’s Magazine.

“The Church of Warren Buffett” (online access limited to subscribers) is an entertaining, if somewhat cynical, look at the phenomenon of BRK and its loyal shareholders – though it falls short of real insight into either Buffett’s investing approach or the relationship of the company with its investors.

I won’t spoil it for you, except for this taste, a quote from the Berkshire Hathaway Owner’s Manual, a 1996 manifesto of Buffett and Charlie Munger’s philosophy of shareownership that the company still offers on its home page:

Charlie and I hope that you do not think of yourself as merely owning a piece of paper whose price wiggles around daily and that is a candidate for sale when some economic or political event makes you nervous. We hope you instead visualize yourself as a part owner of a business that you expect to stay with indefinitely, much as you might if you owned a farm or apartment house in partnership with members of your family. For our part, we do not view Berkshire shareholders as faceless members of an ever-shifting crowd, but rather as co-venturers who have entrusted their funds to us for what may well turn out to be the remainder of their lives.

Now that’s targeting long-term investors. More CEOs could express those feelings.

This year’s Berkshire meeting will be Saturday May 1, with parties all weekend. But you can save the plane fare to Omaha, and the cost of BRK.A or BRK.B shares, by picking up the magazine. Or just spend an hour exploring Berkshire’s website. Ultra-plain in presentation, matching the cultivated down-home-ness of Buffett himself, the site offers a wealth of interesting reading and philosophy on investors.

© 2010 Johnson Strategic Communications Inc.

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A CEO’s pushback on buybacks

January 13, 2010

Update Jan. 20 – After a week, our unscientific poll on whether share repurchases are a good way to create value shows 40% “It depends,” 35% “No” and 25% “Yes.”

An interesting comment on share repurchases – always a stock-market darling for some institutional investors – is reported today in the In Vivo blog, which covers pharmaceutical and biotech businesses and their capital markets:

During the breakout session after his talk here at the JP Morgan conference Sanofi CEO Chris Viehbacher was asked if Sanofi would consider a buyback. His answer was a resounding “no.”

After explaining that his company was “clearly mindful of shareholder value” and citing Sanofi’s dividend as an example of that commitment, he gave his opinion on buybacks.

Companies resort to share repurchases when they’ve “run out of any ideas,” he said. “And the day we run out of ideas, I will retire on that day and let my successor do a share buyback.”

You have to give this CEO credit for his “over my dead body” directness.

My feeling is that repurchases make sense for some companies, in mature or out-of-favor businesses for example, as financial engineering that helps share value.

A firm with growth opportunities crying out for investment – say, new drug R&D projects needing 15-20% of revenues – can argue it has a better idea for using shareholders’ cash. Of course, then management has to deliver on the promise of those investments.

What’s your buyback feedback? Answer the poll, comment, or both.

© 2010 Johnson Strategic Communications Inc.

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Posted in Capital markets & IR, Quotable quotes | 3 Comments »

Execution trumps strategy

October 27, 2009

Companies often find themselves explaining strategies to investors, and investor relations people should be experts on how our corporations are creating value, building competitive advantage and so on. But strategy isn’t the whole story.

Some words of wisdom on strategy – and execution – come from Paul Polman, chief executive officer of Unilever, in the McKinsey Quarterly (text here, video here):

I’ve always said execution is strategy in our business. This is consumer goods. I cannot speak for other industries, but for us, execution is strategy. It’s absolutely important. In fact, the strategies that we have as companies might differ a little bit, but that’s 5 percent or 10 percent of the work. And then the other 90 percent is execution.

I’ve seldom met a consumer—and I go to a lot of home visits or go around with shoppers—and I’ve seldom met a consumer who buys our wonderful Knorr products or Lipton or Omo or Skippy because they like our strategy. And so, our business is a very simple one of getting the right products at the right place at the right quality at the right price—all the time.

And in our industry, share movements are often happening because of lack of execution on the other side. So, this is a very, very important part of us. Now, organizations normally don’t tend to gravitate towards execution, because strategy is the sexy part of all of this.

An interesting thought, in its implications for messages to investors.

One question is, How do we communicate execution as a key message? Surely not just by waiting for the earnings numbers to prove management is executing well – although that’s the ultimate test. IR people need to scour our companies’ everyday and exceptional happenings for achievements that demonstrate skill and discipline in execution. And we need to be telling those stories, as well as our strategies.

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Posted in Messages & writing, Quotable quotes | 2 Comments »

Quote, unquote – Proxy EXcess

August 26, 2009

Discussion of the Securities and Exchange Commission‘s proposed new “proxy access” rule, aimed at giving activist shareholders an easier shot at electing members or slates to boards of directors, can get pretty arcane.

So I was glad to see, in today’s Wall Street Journal, a good primer on 14a-11 and a succinct and quotable quote that, to me, sums up the proposed change. Says lawyer John Finley of the New York firm Simpson Thacher & Bartlett:

It’s the biggest change relating to corporate governance ever proposed by the SEC. Period. It gives activists the ultimate vehicle to express dissatisfaction with a board, the ability to replace board members at the company’s expense.

Business lobbying against the change is ramping up toward the post-Labor Day push. That, of course, is when politicians return to Washington and harvest season begins for the crop of governmental mischief planted earlier in the year.

Maybe we could rename this particular proposal “Proxy Excess.”

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Transparency in troubled times

August 7, 2009

Devoting more time to investors and communicating data to support what you’re saying are among the take-home messages McKinsey & Company consultants heard when they interviewed CEOs of 14 major companies recently for a report on Leadership Lessons for Hard Times.

Jay Fishman, Chairman and CEO of Travelers, weighs in on both the commitment and the content for investor relations in a challenging time:

If I’ve learned anything in the last 18 months, it’s that transparency in troubled times really matters. …

If asked to describe this or that exposure, the advice from many IR departments is to use some formulation that basically says don’t worry. I’ve tried to resist that. Now is not the time to tell people not to worry. If you’re in the financial services industry, you ought to be able to quantify. I try to be specific, and weve gained credibility as a result.

“Not the time to tell people not to worry” – I like that. Instead, give investors the data that leads you to your outlook. And let them decide whether to worry.

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Posted in Financial crisis & recession, Quotable quotes | Leave a Comment »

Overconfidence on Wall Street

July 23, 2009

“Wall Street is a confidence game, in the strictest sense of that phrase.”

- Malcolm Gladwell, “Cocksure”
The New Yorker, July 27, 2009

One of the best storytellers writing today about financial and economic topics, Malcolm Gladwell, takes a shot at Wall Street’s overconfidence in the current New Yorker. It’s one of the wittier dissections of the financial crisis that I’ve seen.

The specific targets are Bear Stearns and Jimmy Cayne, the failed investment bank’s former CEO. If you’re weary of retrospectives on those two subjects, this piece might serve as one last thing to read about them. Along the way, Gladwell weaves together readable tales of overconfidence in war and other settings.

All this has, well, not very much to do with investor relations – except perhaps as a cautionary tale if your boss or you are among those who might earn a label of “cocksure.” But Gladwell offers up an insightful, if uncomplimentary, look behind the curtain on Wall Street. The New Yorker, of course, supplies the cartoons.

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Posted in Financial crisis & recession, Quotable quotes | Leave a Comment »

Quote, unquote – Open dialogue

May 14, 2009

Sounds like a cliché, but if we can walk the talk, this exec has it right:

In uncertain economic times, stakeholders need a CEO committed to transparency, communication and an unwavering focus on client service. H&R Block stakeholders deserve nothing less than an open dialogue about our company’s financial health and business trends.

- Russ Smyth, CEO, H&R Block,
“Communication is Key,” NYSE Magazine, 2nd Quarter 2009

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Is AIG or Grassley more offensive?

March 17, 2009

One of the nastier comments to come out of the financial crisis is in the news today: Sen. Charles Grassley, ranking Republican member of the Senate Finance Committee, brings up suicide as an option for executives in failed financial firms.

From the AP story on Grassley (in an Iowa radio interview) joining the outcry over AIG executives receiving bonuses:

“I suggest, you know, obviously, maybe they ought to be removed,” Grassley said. “But I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide.

“And in the case of the Japanese, they usually commit suicide before they make any apology.”

As I said – nasty. Suicide is not something to treat lightly. I learned long ago, in some past economic down-cycle, that executives of failing businesses are truly in danger. Their companies’ collapse and personal financial losses can seem like the whole world falling apart. This remark lacks compassion and real-world perspective. It’s offensive toward American and Japanese executives.

Of course, we don’t expect much of our politicians – and Grassley is as entrenched as a politician can get, after 50 years in elective office. When the economy is in the dumps, those who fancy themselves populists always villainize the business people whose misjudgments or greed contributed to the economic crisis. But can’t politicians be civil, or at least humane?

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Say it ain’t so, Jack

March 13, 2009

Jack Welch, the longtime CEO of General Electric whose personal and corporate brands were synonymous with growing shareholder value in the Eighties and Nineties, is backpedaling now … big-time. There he is on Page 1 of today’s Financial Times.

The newspaper quotes Welch in a series on the future of capitalism:

“On the face of it, shareholder value is the dumbest idea in the world,” he said. “Shareholder value is a result, not a strategy … Your main constituencies are your employees, your customers and your products.”

Well. Not shareholders? The dumbest idea? We’re all wondering …

Was Welch drugged or tortured by Soviet agents? No, wait a minute, the evil empire fell long ago while Welch was still delivering regular-as-clockwork increases in profits – to the delight of GE shareholders.

So what has come over Welch? The Financial Times positions his blast at shareholder value as an executive spurning short-termism. FT lumps a quarterly earnings obsession together  the drive to improve share price.

Surely Welch is right that strategy is long-term and has to do with a company’s customers, product mix, competitive approach, investment in the future, etc.

But preserving and building value seems fundamental to the mission, aspiration, even raison d’être of a company. A corporation is essentially a trust between owners and their stewards. Shareholder value is part of most CEOs’ pay structure. And rightly so, I believe.

Of course, companies usually emphasize pursuit of long-term shareholder value. Investor relations is largely about explaining that pursuit to investors. OK, we can talk about fighting short-termism.

But, Jack Welch or not, I wouldn’t recommend adding ”Shareholder value is the dumbest idea in the world” as a message point in your annual report or road-show presentation. Not today, not ever.

Anyone want to venture a comment on Welch’s statement?

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Posted in Quotable quotes | 1 Comment »

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