Investor Relations Contact:
Pat Beans, CFO at 402-475-2525 or click here for more information.
T O O U R S H A R E H O L D E R S:
The central topic in last year’s Shareholder Letter has today, unfortunately, found itself front and center in headlines around the world. As is being painfully uncovered day after day, a monumental disconnect exists between the alignment of the incentives and shared values of many corporations’ CEOs and the companies’ shareholders.
For example, a recent headline in the Wall Street Journal reads: Poor Year Doesn’t Stop CEO Bonuses. The article went on to outline numerous examples of shareholder value being devastated while the CEOs of the affected companies take home millions.
When CEOs do not align their own rewards with that of shareholders, how can anyone believe that the other decisions being made by the CEOs are in the best interests of shareholders? As you’re aware in such cases, we are now discovering that many decisions have not been in the best interests of shareholders; rather, decisions are filtered by CEOs through the lens of personal benefit. These actions by the CEOs establish a culture of permission for ill-gotten gain which quickly cascades throughout the organization. Without a doubt, we will see massive regulatory response to this crisis, all intended to align incentives.
In my view, the real problem is that most CEOs do not own a meaningful stake in the company they run. They are not shareholders to a significant degree and, consequently, unwavering alignment of incentives does not exist. I question if alignment can be artificially imposed via regulations. Perhaps it’s time for shareholders to require the CEOs of companies in which they invest to personally have a major skin in the game.
In closing, let me repeat the key message of last year’s shareholders letter. Not unlike the trust that someone would place in you to handle their life savings, I feel we, as an organization, have a special obligation to our shareholders to do the right things the right way all the time. Unlike many companies in today’s world, where doing what’s right seems difficult, I actually see it as effortless because NRC management are fellow shareholders, different only in that we are a little closer to the front line. This ensures, I believe, all major decisions are being made by people in your shoes, fellow shareholders that personally live with the decisions being made.
Best personal regards,
Michael D. Hays,
Chief Executive Officer and Fellow Shareholder