Sid Cato -- Answers

(Answers for July 2000)

1. Whenever you’re involved with a corporation whose annual report you consult on—a company that has retained you to critique its product, for pay—you never fail to disclose that potential "conflict of interest." True or false?
Answer: True—at least, I strive not to forget. On Pg. 1 of the July 2000 issue of my newsletter, I apologize for an earlier oversight: not disclosing in my January critique of the Lucent Technologies report that I had advised the company on its preparation of that highly commendable document.

2. Fewer and fewer CEOs believably had a hand in writing their letters to shareholders in the annual report. True or false?
Answer: False. On the contrary, I personally have credited more than nine of 10 CEOs with playing a role in creation of the missive—"in whole or in part," as I put it. And in my 15th annual Producer Poll, so far respondents have said that, in nearly three of five instances, their boss pretty much wrote his or her own letter.

3. You’re sometimes accused of playing favorites—that is, you adopt a "hands-off" policy toward your pets...like among the graphic design firms specializing in the key shareholder communiqué. True or false?
Answer: Try telling that to Chicago-based Meta-4, which I’ve taken to task for its "cat hairs gone astray," as I put it; compass-wielding designers who seem to feel that random semi-circles, for instance, are with it. Trust me: They’re not. And I’ve reviewed Meta-4’s entire body of work, the results rather mixed, though all are assessed as attractive as well as distinctively different.

4. Some shareholder letters are out of control, going on endlessly. But you’re not doing anything about that, right? Putting it another way, your purview isn’t extended to length of letters. True or false?
Answer: Wrong again. In my July 2000 issue, I single out those more than two dozen companies here and abroad whose letters exceed five pages in length. (Even five pages is charitable, since the average [with results distortions excluded] is just under three.) For each page over five, a point is deducted from the company’s total score. Cinergy led the pack, losing 18 points, its letter running 23 pages in length. Displayed over 28 pages!

5. You, like all of us, make mistakes. But you seldom if ever admit to them in your newsletter, or elsewhere. True or false?
Answer: False once more. For example, I goofed when I said GPU (formerly General Public Utilities) had produced a summary report or a two-parter without so identifying its document as truncated, incomplete. GPU, as I explained this month, did announce that its product wasn’t complete—though its rationale for going down that road was flawed, to my way of thinking.

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	1.	Whenever you’re involved with a corporation whose annual report you consult on—a company that has retained you to critique its product, for pay—you never fail to disclose that potential "conflict of interest." True or false? *Answer:* True—at least, I strive not to forget. On Pg. 1 of the July 2000 issue of my newsletter, I apologize for an earlier oversight: not disclosing in my January critique of the Lucent Technologies report that I had advised the company on its preparation of that highly commendable document.

	2.	Fewer and fewer CEOs believably had a hand in writing their letters to shareholders in the annual report. True or false? *Answer:* False. On the contrary, I personally have credited more than nine of 10 CEOs with playing a role in creation of the missive—"in whole or in part," as I put it. And in my 15th annual Producer Poll, so far respondents have said that, in nearly three of five instances, their boss pretty much wrote his or her own letter.

	3.	You’re sometimes accused of playing favorites—that is, you adopt a "hands-off" policy toward your pets...like among the graphic design firms specializing in the key shareholder communiqué. True or false? *Answer:* Try telling that to Chicago-based Meta-4, which I’ve taken to task for its "cat hairs gone astray," as I put it; compass-wielding designers who seem to feel that random semi-circles, for instance, are with it. Trust me: They’re not. And I’ve reviewed Meta-4’s entire body of work, the results rather mixed, though all are assessed as attractive as well as distinctively different.

	4.	Some shareholder letters are out of control, going on endlessly. But you’re not doing anything about that, right? Putting it another way, your purview isn’t extended to length of letters. True or false? *Answer:* Wrong again. In my July 2000 issue, I single out those more than two dozen companies here and abroad whose letters exceed five pages in length. (Even five pages is charitable, since the average [with results distortions excluded] is just under three.) For each page over five, a point is deducted from the company’s total score. Cinergy led the pack, losing 18 points, its letter running 23 pages in length. Displayed over 28 pages!

	5.	You, like all of us, make mistakes. But you seldom if ever admit to them in your newsletter, or elsewhere. True or false? *Answer:* False once more. For example, I goofed when I said GPU (formerly General Public Utilities) had produced a summary report or a two-parter without so identifying its document as truncated, incomplete. GPU, as I explained this month, did announce that its product wasn’t complete—though its rationale for going down that road was flawed, to my way of thinking.