Posts Tagged ‘Annual reports’

Vikram Pandit & his annual reports

August 14, 2008

The September issue of Portfolio magazine carries an interesting profile on Vikram Pandit. Nine months into his role as CEO of Citigroup, Pandit is the subject of a spate of recent news articles probing whether he is up to the job (or whether Citigroup is too enormously complex to fix).

The electrical engineering grad and PhD in Finance (see bio) “has researched his plan to fix Citigroup with a focus bordering on obsession,” Portfolio says, including reading Citi annual reports that go back to 1956. Explaining his interest in a half-century’s worth of annual reports, Pandit comments:

With any organization that’s been around for 200 years, it has a history and culture. It develops a unique DNA in many ways. To get a clear sense of that picture has been very important to me.

You have to admire the recognition that history and culture matter, even in a gigantic business organization. People working up and down the corporate ranks do have some sense of heritage, “a unique DNA,” however mixed those stories may become through innumerable mergers, de-mergers and changes of strategy. Looking into what made a company great may help lead a CEO in charting the path forward to future greatness.

As an IR practitioner, I found the use of annual reports as a chronicle of corporate DNA intriguing – and challenging. Beyond the numbers, each year’s report to investors is an opportunity to capture and describe the life force of a company, not only the business strategy buy also the personality and human drive, that ultimately produces the financial performance investors are seeking. Long-term investors often are betting on that DNA.

(Endnote: Thanks to BankStocks.com’s blog for alerting me to this profile.)

Advertisements

Let’s talk about the market …

June 26, 2008

No, not that market – I mean the market for our products or services.

Some time back I was writing an annual report for a bank, so I called up a few analysts and institutions who followed the stock. “What would you like to see in this year’s report?” Their answer was succinct: Tell us about the markets where the bank does business. We’re in New York or Boston and don’t spend much time out in flyover country. Are your customers hourly workers or entrepreneurs, farmers or retirees? How fast is the population growing? Does it look like new suburbia or old urban core? What about median income, business formation, competition? Can we see a map?

The market for goods and services is the economic engine that drives future results, so describing and quantifying that dynamo is of great interest to long-term investors in our companies.

Too often, though, investor presentations and earnings announcements ignore the real-world economic interactions and focus only on reporting the latest numbers. Numbers are critical, but this emphasis feeds the short-term interests that CEOs, CFOs and IROs so often decry.

One way to speak to long-term investors is to put the company’s market front and center in the investor presentation, MD&A introductory disclosure urged by the SEC, website, conference call and so on. We can’t do anything about the stock market, anyway, but we can focus on our markets.