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Pay Attention to What the Executives Say and Do

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Publically traded companies in any industry are required to have certain information accessible to all their shareholders. This includes having access to interviews being made by executive officers in that company. A new shareholder may only be worried about the few basics that are listed below. However, even more knowledgeable investors look for many of the same things.

Company Direction

Executives give a variety of interviews and talks on various platforms throughout the year. They talk about everything from new products to the closure and opening of new locations. Knowing how the company plans to trim expenses to increase growth is important information for shareholders.

A company can change strategies for a variety of reasons. One of the most recent ones is in the fast-food industry. With base wages on the rise, popular chains are looking for a way to decrease their bottom lines and enter automated order taking. The long-term impact has yet to be determined; however, shareholders are definitely keeping watch.

Growth through innovation is not a new strategy. There are no hard and fast rules for why particular techniques may or may not work. So it is always a good idea to research a strategy before making any decisions.

Financial Strength

Contrary to many beliefs, the executive’s net worth is not a reflection of the business’s financial strength. While CEOs and other executives do draw a salary, the company’s net worth is calculated based on liabilities minus assets. A business can gain monetary assets from a variety of means including improvements in advertising and various other innovations. For instance, the successful development of new products can increase the companies’ earning potential which, in turn, impacts the financial strength.

Spearheading the creation of Google being the most prominent search engine greatly increased Sundar Pichai net worth. However, his net worth is not bound up in just one venture. He serves as the CEO of Google and its holding company Alphabet.

Agenda of the Board of Directors

While this might sound very close to understanding the direction the company is looking to move into, it is a little different. The board of directors is made up of those who can influence which direction the company moves into. The members use a variety of resources to help them decide what options are the most viable and then vote on them.

Shareholders, in turn, can influence the way the board decides to vote. Depending on how many shares a person holds, they can be eligible to vote for who sits on the board. Simply put those sitting on the board are elected.

Being able to make these decisions directly impacts the way people who sit on the board may vote. A company’s business agenda is no longer decided in smoke-filled conference rooms on the 20th floor. Consequently, if there are enough votes for or against a particular policy, company executives have to at least take those opinions into consideration.

Day to Day Decisions

Being able to understand what impacts the day-to-day decision is something else a shareholder needs to understand. This is important as it helps those invested in the business understand not only the points mentioned above but also the in-depth operations of the company. However, it is not something that most shareholders have access to. Generally, a shareholder receives quarterly reports and/or a synopsis of what was discussed in yearly shareholder meetings.

Monitoring these reports can reveal what the current board of directors is thinking and what decisions they would like to make.

It might be difficult for new investors to understand why they should take note of interviews given by company executives. However, at least being able to read the transcripts yields a lot of important information that shareholders need to be aware of. Everything from company direction to potential mergers and acquisitions can be found in those interviews.

Even experienced shareholders can learn a thing or two from yearly interviews and reports given by company executives. While the list of what a shareholder will be looking for is extensive, even a starting point will lead to better understanding.

Ieva Ofer
the authorIeva Ofer