I was sent an email this week by the CEO of a holding proudly announcing they have hired a third party firm to conduct a survey of shareholders to figure out what they are thinking.
This was my response to her:
I can recall in probably 3rd grade when a test was given out and the first line was “Read All Questions First.”
Naturally, I proudly whipped through and answered the 10 multiple choice questions. And at the bottom was –“You failed if you didn’t follow the instructions.”
So, if you are asking – hiring a consultant to find out what people are thinking is…A Fail.
- Most importantly, shareholders want leadership. You have been the CEO for ten years. We want YOU to tell US, we want the comp plan to reflect what you tell us, and ye shall be judged accordingly. Every CEO has a “bias and a style” and every shareholder the same. We want you to have a true north and you will attract the like-minded shareholders. Appealing to all is like dinner theater – the food and the theater tend to be awful.
- Accordingly, you should have built relationships with your largest and longest holding active shareholders/owners. So – if you are looking for feedback – that is where you go.
- The Board separately could/should also be scheduling calls with said shareholders and finding out opinions outside of your corridor. They are complicit in this failure of mission.
- There is no mystery here: you have a set of businesses; each should be judged on return on capital and how much capital one can intelligently invest to drive gross dollar growth – per share. The excess can be given back or Acq made. The former is simple: you internally evaluate a range of values for the company -inside and outside help. If your stock price is lower than that – buy back the stock. If not, consider dividends, special and ordinary. Acq should be evaluated accordingly in a similar lens.
Hiring an outside PR firm is the worst of all worlds. It either shows lack confidence, lack of appropriate team and advice around you, or the suggestion that you haven’t been paying attention all along? All the above?
Which seems unlikely to be true. But you just dug that PR hole. And are wasting your own time and our money.
-JB
