 |  Periodic editorials concerning everything from the very worst industry—from an annual report standpoint, that is—to what's wrong with the Fourth Estate. Reporters who can't hit an accuracy with a cannon. |
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| Periodic editorials concerning everything from the very worst industry—from an annual report standpoint, that is—to what's wrong with the Fourth Estate. Reporters who can't hit an accuracy with a cannon. |
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Sid parses the year's 10 best reports; are they truly exceptional?
In the October issue, No. 242 (every month since September 1983) of my monthly Newsletter on Annual Reports, I listed those who proudly qualified—their annual reports to shareholders, that is—as the world's 10 best for 2002. But I got to thinking, as I looked at my notes: This year's 10 best, to be sure; but how did they stack up again earlier years' output? The answer: Not so good. A year earlier, for example, it took 120 points—of a potential 135, that is—to anchor the 10-best list. This year, using 120 points as a cutoff, only three reports did so well: Tellabs with 135, AFLAC, 133, and DTE, 122. The other seven a year earlier would have been also-rans. Another gauge: The Cato Positive Index, reflective of inclusion of three dozen elements I consider imperative for an outstanding report, stands at 9.7%—to be sure, an improvement over 7% among 2001 reports overall...but second lowest CPI in six years—since 9% among 1996 reports. This is an element I began tracking among 1986 reports, upon learning that a New York analyst used "secret indicators" that enabled her to foresee that era's stock market crash. "Why don't I create secret indicators?" I asked myself over breakfast. And promptly (1) did and (2) revealed them for the entire world (of annual report producers, at least) to be aware of. That first year, 4.1% was the average CPI; it declined to 3.1% among 1988 reports, an abysmal 0.9%—less than 1%, even—among 1994s. Best year: the 1997 crop of reports—when a score of 124 points was required to achieve 10-best status. Using that as the benchmark, only Tellabs with 135 and AFLAC with 133 would have made the cut. The problems, of course, are legion: The government's meddling (Sarbanes-Oxley I'm sure was honorably enacted, but it has raised havoc with the annuals produced in this country, at least), and the slipperiness of corporate officers—especially, CFO's and legal beagles—have set the art of annual reports back to square one, with a couple exceptions. To those of us who (1) advocate openness with stockholders and (2) are convinced the annual report has benefits as a result of its perpetual shelf life—well, we mourn the temporary decline, the current setback. One only hopes, fervently, the pendulum will swing back. Until then: Long live the annual report to shareholders! |
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