The Duller, The Better

Plain, plain, plain. What's striking about the current crop of corporate annual reports isn't so much what's there as what isn't: no flashy images of male athletes naked but for a pair of athletic shoes (Reebok International, 1990), sumo wrestlers (PepsiCo, 1990), or leather covers (Wolverine World Wide, maker of Hush Puppies shoes, 1993). "Companies are not going for any gimmick at all this year," says Sid Cato, publisher of Sid Cato's Newsletter on Annual Reports.

Austerity is hip for a reason: The dominant theme of annual reports for 1994 is "shareholder value." Those two words are a sort of corporate mantra, plastered on the front covers of corporate missives from insurer St. Paul Cos., office-products maker Avery Dennison, and defense giant General Dynamics, among others. AT&T didn't get the mantra on the cover of its report, but it did billboard a mission statement--promising to deliver you know what--on the back.

Executives who didn't deliver what they promised in 1994 mince no words in vowing to try harder. "Your company's 1994 results are awful," begins Robert E. Denham, Salomon Inc.'s chief executive in this year's report. Unisys Corp. CEO James A. Unruh is nearly as blunt: "We didn't do what we set out to do in 1994--namely, to increase our profitability and revenue."

Lots of companies are betting that a bare-bones design will signal to shareholders that they really plan to hold costs down this year. "There is an attempt to design reports so that they don't look so expensive," says Glenn Hersh, president of H/M/S Inc., a Montclair (N.J.) producer of annual reports. "Some CEOs want to give the impression to the shareholders that they're watching expenses."

COUPONS, TOO. Examples: Bell Atlantic Corp.'s report is so stark it could easily be mistaken for a proxy. And at MCI Communications Corp., known for flashy annuals in the past, this year's model is deliberately understated. With intense competition going on in long-distance services, some investors questioned the cost of fancy reports. Read-Rite Corp., a maker of computer disk-drive parts, simply sends shareholders a single folded page, along with a copy of the 10-K form companies are required to file with the Securities & Exchange Commission.

Some companies take the theme of delivering value literally: IBM encloses a coupon good for a discount on some software. And Goodyear Tire & Rubber Co. offers shareholders a $25 rebate if they purchase four tires. At least if Goodyear's stock goes flat, customers can take solace in the good deal they got on a new set of Aquatreads.

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