Doing good by doing well?

November 29, 2007

images-12.jpegNearly four years ago, I footnoted Jacobs Engineering (JEC) for what at the time seemed like a minor revolution: giving investors an easy way to contact directors via email or a toll-free number to file “at any time a good faith complaint regarding any questionable accounting, internal accounting controls or auditing matters concerning the company at any time”. It was language that struck me as being particularly open, not to mention highly unusual.

It’s been years since I’ve looked at Jacobs again. But I was reminded of that post when I glanced at the 10-K they filed earlier today. Then I looked at the stock price — and specifically how the company has performed during that time: up nearly four-fold on a split-adjusted basis, which is pretty impressive! And while it’s obviously too simplistic to say there’s a direct cause and effect here, I’d argue that this type of openness does have an impact because it shows that a company’s management isn’t wasting time and resources trying to shove problems under the proverbial mattress (read: holed up with lawyers and accountants trying to bury it deep in an SEC filing) and, instead, is focused on executing their business.

All of this, of course, is particularly interesting in light of the SEC’s decision yesterday to limit shareholder rights, despite the thousands of letters that poured into the SEC. While outgoing SEC Commissioner Annette Nazareth gave a forecful dissent, the bottom line is that investors lost yesterday. Maybe if there were more companies like Jacobs out there, yesterday’s decision wouldn’t be such a big disappointment. But even four years later, that’s just not the case.

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