21 Mar 2015 12:10
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Same Old, Same Old
As an investor, sometimes I get so wrapped up in analyzing financials and market trends I gloss over the CEOs “Letter to the Shareholders” at the front of their annual report.
Some of my attitude is due to the stereotype that CEOs are arrogant and overpaid that exist to; profit their wallets, stoke their ego and/or to please major Wall Street investors. Then there is my jaded attitude after reading so many CEO letters that I expect all to be the same where they preach the company motto and mention how things will get better.
Here is a great example. United Technologies (UTX) recently appointed a new CEO who penned their 2014 annual report letter to shareholders. Here is an expert from that letter:
”It is an honor to write to you for the first time as United Technologies’ President and Chief Executive Officer, and I am extremely proud and excited to lead this exceptional company.
-Gregory Hayes CEO”
This is the standard type of stuff that makes me yawn with boredom. The way I perceived the message was: ”I received this massive and strong thing (the company) and I promise you Wall Street that I won’t screw it up.”
Like I said earlier, at times I am a little jaded over these letters. Personally I have nothing against UTX and think it has been an awesome investment over the last 20 years. It is just the financials that motivate me more than their CEO.
The Visionary
But not all CEOs are the same. Some defy the stereotype and deliver incredibly powerful or visionary statements. Take for example Amazon’s (AMZN) Annual Report:
”I’m so proud of what all the teams here at Amazon have accomplished on behalf of customers this past year. Amazonians around the world are polishing products and services to a degree that is beyond what’s expected or required, taking the long view, reinventing normal, and getting customers to say “Wow.”
Jeffrey P. Bezos - CEO“
His intensity on customer satisfaction is like this year in and year out. I now understand why so many can get caught up in his enthusiasm and drive and invest in AMZN even though the stock price is so incredibly lofty (the price to book ratio is just over 16).
He Gets It!
As impressive as a visionary CEO may be, I finally found a CEO that understands every shareholder is a part owner in the business. It does not matter if the investor is from Wall Street or Main Street, whether they have 1 share or 10,000 shares or if they are the company founder or a hard working dad. We are all owners in the company. Look at this quote from Thor Industries (THO) 2014 Annual Report:
”As the CEO and Executive Chairman of your Company, we are committed to the future success of your Company as we continue to build great products, satisfy our dealers and retail customers and, ultimately, deliver solid results for our shareholders.
-Peter Orthwein COB and Robert Martin CEO“
Finally a CEO that gets it! Peter Orthwein is not just proud of his company or the goals they are achieving but is humble enough to admit that he is leading YOUR company. It is refreshing to see this attitude when so many CEOs today receive exorbitant compensation and come off as disconnected from the small or Main Street investor. Luckily, I am a current shareholder of THO and this just adds to the reasons of why I invested in THO. In all fairness to disclosure I am also a shareholder in UTX but not AMZN.
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