Sid Cato -- March 2001 Quiz Answers

(Answers for March 2001)

1. You advocate that stockholders invest no more than five minutes in reading the annual report of a company they invest in. True or false?
Answer: False. My contention is that I don't believe anyone can tell how long stockholders invest in the key corporate communiqué. The editor of Family Money magazine reportedly is convinced they're not worth the paper they're printed on. A columnist, author Gary Belsky, disagreed, says they're worth an arbitrary five minutes. I say that if the cover doesn't demand the recipient become reader, the report should be heaved in the nearest waste receptacle. Thereafter, it’s up to the recipient how long he or she spends.

2. About your annual conference: If it's so good, why don't you get repeat-attendees? I hear seldom does anyone return. True or false?
Answer: Decidedly false. Already, of the 75 slots available in Baltimore this fall, 42 of them have been spoken for—paid—by prior attendees or associates of prior attendees who recommend my annual event.

3. Your Cato Positive Index, monitoring 36 items you consider important to an annual report, is closely tied to a company's point score. Is that correct?
Answer: True, usually. But some companies' reports have a high CPI, yet a low score. Case in point: The 1997 Brady Corp. report had a 41.7% CPI, scored only 83 points. I conceived of the CPI as an aid to helping me pinpoint a report that appeared destined for greater heights. Generally, a report whose CPI is less than 40 percent won't have its readability evaluated, for instance, or other similar fine-tuning.

4. It's one thing for a company to have a good annual report—in print, that is—but quite another to do well online. True or false?
Answer: True, usually. Brady (again!) is an exception, its 2000 print report warranting "world-class" status with 108 of a possible 135 points. And its online version is equally exemplary, with several unique-to-the-Internet features. I awarded it an A.

5. You're said to play favorites—that an important, highly visible CEO like Walt Disney's Michael Eisner can do no wrong. True or false?
Answer: On the contrary: Eisner (VIP or no) has come in for his share of knocks over the years. His annual report has made my list of world's worst more than once, just as Chief Executive has named his board one of the world's five worst. His 2000 report, to my way of thinking, not only is amateurish in appearance but is the reflection of a chief executive whose ego is uncontrollable. He's convinced he's God's gift to the corporate world. Trust me, he’s not.

6. Writing, even though your background is as a newspaperman, gets little attention in your judging of annuals. True or false?
Answer: False. In a way, writing gets double emphasis. Reports with a high befogging index (through use of big words), plus excessive words per sentence—they’re penalized doubly so for every two average words per sentence over 16. That's the lid we professional writers strive not to exceed. Disney’s writing, for instance, cost it two points for a 13.32 fog index, five more for its 26.8 average words per sentence.

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	1.	You advocate that stockholders invest no more than five minutes in reading the annual report of a company they invest in. True or false? *Answer:* False. My contention is that I don't believe anyone can tell how long stockholders invest in the key corporate communiqué. The editor of Family Money magazine reportedly is convinced they're not worth the paper they're printed on. A columnist, author Gary Belsky, disagreed, says they're worth an arbitrary five minutes. I say that if the cover doesn't demand the recipient become reader, the report should be heaved in the nearest waste receptacle. Thereafter, it’s up to the recipient how long he or she spends.

	2.	About your annual conference: If it's so good, why don't you get repeat-attendees? I hear seldom does anyone return. True or false? *Answer:* Decidedly false. Already, of the 75 slots available in Baltimore this fall, 42 of them have been spoken for—paid—by prior attendees or associates of prior attendees who recommend my annual event.

	3.	Your Cato Positive Index, monitoring 36 items you consider important to an annual report, is closely tied to a company's point score. Is that correct? *Answer:* True, usually. But some companies' reports have a high CPI, yet a low score. Case in point: The 1997 Brady Corp. report had a 41.7% CPI, scored only 83 points. I conceived of the CPI as an aid to helping me pinpoint a report that appeared destined for greater heights. Generally, a report whose CPI is less than 40 percent won't have its readability evaluated, for instance, or other similar fine-tuning.

	4.	It's one thing for a company to have a good annual report—in print, that is—but quite another to do well online. True or false? *Answer:* True, usually. Brady (again!) is an exception, its 2000 print report warranting "world-class" status with 108 of a possible 135 points. And its online version is equally exemplary, with several unique-to-the-Internet features. I awarded it an A.

	5.	You're said to play favorites—that an important, highly visible CEO like Walt Disney's Michael Eisner can do no wrong. True or false? *Answer:* On the contrary: Eisner (VIP or no) has come in for his share of knocks over the years. His annual report has made my list of world's worst more than once, just as Chief Executive has named his board one of the world's five worst. His 2000 report, to my way of thinking, not only is amateurish in appearance but is the reflection of a chief executive whose ego is uncontrollable. He's convinced he's God's gift to the corporate world. Trust me, he’s not.

	6.	Writing, even though your background is as a newspaperman, gets little attention in your judging of annuals. True or false? *Answer:* False. In a way, writing gets double emphasis. Reports with a high befogging index (through use of big words), plus excessive words per sentence—they’re penalized doubly so for every two average words per sentence over 16. That's the lid we professional writers strive not to exceed. Disney’s writing, for instance, cost it two points for a 13.32 fog index, five more for its 26.8 average words per sentence.