Dear Mr. [Name and Company Withheld],
Obviously, I am not a major investor nor am I anyone of influence, but via the mutual fund my retirement account is invested in, I’m an owner of your company. After receiving your recent “attention shareholders” letter, I’m formally accepting your invitation for “welcome feedback.”
In the letter you make clear mention of future growth, anticipated profits, and new product developments. All of those are totally awesome. You also mention some other “groundbreaking” activities. None of those are awesome at all.
To be crystal clear, as a shareholder, I want two things from your company: increased dividends and long-term stock appreciation.
That’s it.
Anything that negatively impacts these two wants of mine will not make me happy. If resources or efforts are allocated in such a way that reduces profits or the forecasts of profits, I’m against them. Across the board.
Firstly, you mentioned a specific focus on solar energy and ramped up “investment” in making your facilities “fully reliant on non-fossil-fuel generated energy.” While I’m sure this feels really good, the economics do not seem to work. It will be years and years before that “investment” breaks even. That’s not investment, that’s wasting precious capital.
Perhaps you spent time on Apple’s website and were inspired. Well, as their stock is up 49% YTD (ours isn’t) and they’re valued around $700 billion (our company’s isn’t), it would be better to imitate their core competency: producing products that people will literally sleep overnight on the sidewalk for the opportunity to buy.
Secondly, you announced a commitment to diversity and a new Vice-President level team to achieve that goal. That a lot of overhead and energy devoted to something that really boils down to “we aren’t racists.”
From a staffing perspective, I’d suggest we hire people who are most apt to perform at the highest level. There should be no other motivation for bringing someone on board. The race, gender, or sexual preference make-up of the company the results from hiring the best candidates shouldn’t even note a mention.
Your analysis of the racial makeup of the company indicates a sensitivity to that which is completely unimportant. You’re accepting the false idea that one should expect a racial distribution that mirrors that of the country. Imagine if the NBA tried that approach. Just hire those that excel at what we need.
The idea for this may have come from GE, as they make a big deal about their diversity programs. With all of the government contracts they get and political connections that they pay big bucks for, it make sense. They’re one of the largest international corporations in the world (whereas we are not) and there’s a point to their cross-cultural efforts.
Lastly, you concluded with a mention of the company’s charitable endeavors. Please stop it. I’ve invested my capital for a return on investment, not for you to use it charitably.
You may have gotten excited about charitable activity reading Forbes Magazine’s article this summer. It may have been encouraging to you to read about those that gave the largest percentages of their profits away and imagine the positive press that resulted. Please think again.
Notice the key words are “profits away” and what that means. That means less dividends or less money to invest in other opportunities.
I’m not against charity, by any stretch, as I give plenty of money away. I’d just like to be the one to decide where my money goes, and a portion of the profits you want to give away are actually mine. Please return them to me so I can decide for myself where they should go.
I realize you’ve probably got consultants advising you on these things and they’ll react quite strongly to my suggestions. They too are paid from profits and distract you from what we’re really all about: creating a demand for our products and supplying them at a price and quality that will keep people wanting more and more and more.
Imagine the wonderful press that will come from that.
Thank you for your consideration,
John Q. MainStreetInvestor
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