It is annual report season, the time of year when companies send out proxy information and annual reports to investors. I own a few shares in several companies so my mailbox fills up with these documents. It is interesting to see what the firms choose to send.
An annual report is an important branding tool. It is an opportunity for management to review business results and discuss where the company is heading. This is important information for many investors. The annual report is also an opportunity to communicate with and rally employees. A company can celebrate successes, recognize contributions and highlight the values that drive the firm.
I received Kraft’s annual report last week. I used to work at Kraft and enjoy learning what the company is up to.
Kraft’s mailing included a proxy statement and a 10-K form printed on flimsy paper. There was no CEO letter explaining the company’s direction and discussing the results. There was nothing on the company’s values. There was nothing about Kraft’s great employees and brands. The cover is a financial form. Here it is, in case you didn’t get one.
This is just embarrassing.
It is particularly bad because most people don’t even know what Kraft is anymore. The company split into two parts in late 2012, forming Kraft Foods and Mondelez. Kraft needs to establish its new identify. This is a critical moment for the organization.
So this year the executives at Kraft decided to send out the formal financial statement and skip the more reader-friendly version of the annual report entirely.
I’m sure Kraft saved a little money with the decision but this is an example of worrying too much about short-term savings and too little about investors, employees, and the brand.
Fortunately, many other companies do a better job. For example:
-United Technologies, Abbott, Mead Johnson and GE sent polished and impressive annual reports.
-Boeing, Lockheed Martin, Eli Lilly, CSX, UPS, Waste Management, PepsiCo and the New York Times sent the required financial information with a thoughtful business update.
-Kimberly Clark just sent the 10-K but at least put a cover on the financial statement.
When building a brand, everything matters. Companies can build short-term profits by cutting spending on things like the annual report but this type of thinking doesn’t create great brands that connect with people and endure.