I love reading the letter to shareholders that frames up the annual report for public companies.  There is so much to learn about the culture and strategy of the company, and the tone of the CEO.  I also look to the letter to get some insight about the market focus of the corporation...or the apparent lack thereof.  Probably I have always done this, but I began doing it more overtly after Peter Darbee, Chairman & CEO of Pacific Gas & Electric, wrote the following introduction to the 2005 PG&E annual report:

 
DEAR STAKEHOLDERS:

In 2005, PG&E celebrated 100 years of providing gas and electricity to Californians. At the start of our second century, our new focus and direction may best be signaled by this: PG&E's 2005 annual report to shareholders - our 100th - is the first ever to picture a customer on its cover.

Darbee, a former CFO, understood completely the significance of the words and pictures that accompany the financial reporting.  And what a way to establish his leadership and vision at a key milestone in the company's history.

I was curious to see if there's some sort of award for best annual report, and of course they are numerous.  In fact the League of American Communications Professionals (LACP) specifically gives an award for best letter to shareholders.  I wondered if I would agree, and was surprised to find I absolutely agreed with last year's award recipient.  Here's the opening:

To our shareholders, associates and customers:

When I look back over this past year, one thing stands out very clearly. The hard work and exceptional efforts of our two million associates, managers and leaders around the world paid off by year-end.  In fact, the year really took off during the second half. What brought it all together was WalMart living the mission of saving people money so they can live better. Whether it was in the United States, the United Kingdom, Mexico or Brazil, we positioned ourselves as the unbeatable price leader.  Our customers appreciated it and our shareholders understood it.

Lee Scott, President and CEO, WalMart

How cool to have shareholders, associates and customers each called out in the salutation and opening paragraph!  PG&E's "dear stakeholders" covers the same territory, but Scott makes it personal.  And I think we all know that WalMart had a successful 2008.

Just for fun, I took a look at last year's annual report at General Motors.  I expected to be underwhelmed, but I was astounded.  In 3352 words, the 2037^th was customer - and it was the only mention: "We've begun delivering 100 Chevy Equinox Fuel Cell SUVs to customers in the U.S. and Europe, to create the world's largest hydrogen fuel-cell test fleet."  And check out Rick Wagoner's introduction:

DEAR STOCKHOLDERS:

A century is a long time to be in business. For General Motors, it's been a century of leadership and achievements, of challenges and opportunities. A centennial is a great time to reflect on and celebrate the past. But for us, it's more than that...it's an opportunity to look forward to our next 100 years.          

Rick Wagoner, Chairman & CEO, GM

Ouch!  "Dear Stockholders" - and then three sentences focused on the past, and one on looking forward.  Hardly inspiring, and wow, what an omission of the customers and employees that matter.  I was thinking about how hard it would be to write a 3352 word letter and not mention customers or consumers.  You'd think the words would creep in almost by accident, regardless of the strategy of GM.  No one needs to throw more stones at GM, but it is a stunningly inward letter. 

I checked out PG&E's report they just issued - and I'm glad to say that Darbee is staying the course:

The most important thing we provide to our customers doesn't flow through pipes or wires.  It's the confidence that their utility is a company they can count on.  And it flows from our 20,000 men and women, who share a collective commitment to reliability in all we do.

As a leader, as an investor, as an employee - take a look at what your own company is saying, and let me know your thoughts.  And just for fun, here's a link to what may be the only intentionally humorous annual report being published.  https://www4.acuity.com/acuityweb/about/relatedtopics