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Portrait of a Champ
Reporters invariably ask, indicating they've not familiarized themselves with this website, www.sidcato.com:
"By your standards, what makes a good annual report?"*
That's an easy one.
All 20 (to date)—one in 10 of the overall universe so far—to breathe the rarefied air of a champion have many elements in common. Putting it another way, each has touched various obligatory bases:
- All but one ran a contents listing, an index. All but four knew enough to enliven it, as does every magazine, every daily newspaper. (When will they learn?)
- None went the summary report route, a Cato no-no; neither did any rely on the legalistic Form 10-K in whole or in part. (The 10-K is the Securities and Exchange Commission's version of an annual report. It was never intended for public consumption; that is, by the common stockholder. You and I.)
- All but one knew enough to use the company's logotype on the report cover (either the front or back). My adamant position on this issue: Either use your logotype or come up with a new one.
- Those to achieve "world-class" status so far this year have books running 60 pages in length, 10 pages more than 2000 reports overall. (Length of results-distorting 10-K's or summary reports isn't counted.) Their letters to shareholders average 3.4 pages, very same as the current length worldwide.
- Three in four know enough to include an end-use picture—a photograph of the product or service in use. Colorado's CoorsTek didn't—and I haven't a clue as to what it's up to. (On second, thought, maybe that's its goal.)
- Four of five champs pictured employees, though a lesser seven in 10 identified each—as all officers without question are identified.
- All but two pictured directors, shown individually in all but one instance. (And, as with officers, all the directors were identified.)
- More than three in five pictured officers—more than nine of 10 times individually (that is, not in a boring, share-the-blame group shot).
- Nine of 10 included a mission statement, 13 of the 20 (65 percent) a glossary of terms. Special editorial sections appear in four of five.
- Three in four have published financial data for the 11 years I advocate. A high 95 percent use data for more than the minimum (five years) required by the SEC. That's encouraging.
- Only one used photographs taken by amateurs (and showing it)—that, or file shots, which should have been allowed to continue gathering dust.
- They average a 68.3 percent Cato Positive Index, almost eight times the current worldwide average. Indicating what? That those who do well are several times as likely to include the various elements advocated.
- Each used the CEO's photograph with the letter to shareholders—and that picture led off in every instance. One in five times, he or she wasn't pictured alone, though.
- Director bios were more likely to be used (more than simply age and years of service) than bios of officers. Four of five annuals used the former, three in five the latter.
- Honesty, obligatory in this competition, was perceived in every instance.
- Most (all but one) were credited with having a new appearance. Thirteen of the 20 likewise were seen as emulating look—and appeal—of a commercial magazine.
- All but one I found suitably attractive. Four of five solicited readership through various techniques ranging from pull-quotes to callouts to an action-oriented contents listing (the so-called "talking table of contents").
- None was seen to have a board that excluded women and/or minorities.
- Somewhat surprisingly, one in five CEOs was dressed casually—either tieless, or without jacket, or both.
- Three of five knew enough to caption graphs fully—all those used, the current requirement. (Remind me sometime to tell you about my speech in Wisconsin to financial types, none of whom could tell me meaning of a graph I displayed. "Now I don't feel so stupid," I told the audience.)
My exclusive, 16th annual Producer Poll indicates that more than four in five of the men and women charged with responsibility for their company's annual report say work on the project can be a hazard to their health or emotional stability, and have so reported year after year.
I can see why.
* Sid Cato's copyrighted criteria on what makes a good annual report.
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