Backstory: When reading an annual report, wear your waders

If you own any shares of common stock, you know that along with the daffodils, spring will bring the ubiquitous Annual Report to Shareholders. Thick with financial information indecipherable except to highly trained accountants and Warren Buffet, these reports, many over 100 glossy pages, are the gospels of capitalism.

They're how huge corporations like General Electric and ExxonMobil explain to you, one of their valued stakeholders, the good they are doing for humanity. In its most recent report, for example, GE touts its efforts to "improve environmental performance" and lauds how GE stock has allowed investors to put their kids through college. Now, there's no doubt GE brings many good things to life, but not mentioned is what it's like to be on the receiving end of a GE-powered F-16.

The best thing about large American corporations is how democratic they are: Every year shareholders get to elect a board of directors and put forth their own proposals on which everyone else can vote. It's kind of like a Vermont town meeting conducted via mail. In fact, before I mark my ballots I put on a flannel shirt and waders.

Among this year's candidates for the board of directors at GE are, I kid you not, James Cash and Ann Fudge. I don't recognize most of the names on the slate (former Sen. Sam Nunn excepted), but my guess is that very few of them are people I'd be likely to meet someday. One candidate for Pfizer's board this year is Michael Brown. Now, I checked, and this is not FEMA's Michael "Brownie, you're doing a heck-of-a-job" Brown. It's a professor of biomedical science from Texas.

Still, with negative name recognition like that you'd think the candidates running against him would have it easy, except that no one is running against him. Remember when Saddam Hussein was reelected president of Iraq with 99.9 percent of the vote? It's kind of like that.

Fortunately for shareholders, there is a ballot initiative process. Here, a single shareholder, no matter how small his stake, can attempt to direct company policy by putting a proposal to a vote of all the shareholders. For example, among the proposals on this year's Pfizer ballot are two related to laboratory animal care and testing and another requesting a report on the company's political contributions. A DuPont shareholder this year wants a report on chemical plant security, a huge issue in an age of terror.

For the average shareholder who can't possibly delve into the complexities of these issues, the ballot clearly indicates whether the board of directors recommends a vote for the proposal - which they don't. After all, if it was such a good idea the directors would have thought of it themselves.

Inside the proxy statement, another page turner, the directors always explain how carefully they have considered each proposal and why, say, being required to tell shareholders how much cash they've funneled into congressmen's pockets is not a good idea.

With regard to chemical-plant safety, I was relieved to read that DuPont already has "processes and programs" to "reduce risk" that are "reviewed regularly," so obviously there's no need to bore us with the details.

Even if we small fry have little say in how large American corporations are run, the annual reports are good places to learn something about how the world works. This year, for example, I learned that "change drives progress" and not, as I had thought, the other way around. I also learned that "the challenges and opportunities of a global economy are bigger than ever." When, I wonder, will they get smaller? Finally, I learned that we are in "a new era of opportunity." That's good news. I was really getting tired of the new era of opportunity that began last year.

Peter Zheutlin is a Boston-based freelancer.

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