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MARSHALL, Mich., Aug. 1, 2002.—By one analyst's standards, three of four annual reports to shareholders of publicly held companies around the world aren't well written.
So says Sid Cato, editor/publisher of his long-running (since September 1983) monthly Newsletter on Annual Reports, aimed at producers of the key corporate communiqué. In his 19th year of monitoring the world's annuals, Cato said only "one in five 2001 reports wasn't penalized" for writing. He said that "contrasts with a slightly better 22.7 percent" among 2000 reports whose writing passed muster. Cato believes words per sentence shouldn't average greater than 16—"the maximum the pros strive for"—nor fog index of the shareholder letter (reflecting use of big words) exceed 12. "Meaning," he said, "a high school graduate can comprehend what a CEO is trying to say; three of four this year can't." Cato said 13 percent of the 2001 reports he has analyzed achieved "world-class" status, scoring at least 100 of a potential 135 points—best since 1997 reports, when 14 percent "hit the heights." |