Stocks

CEOs Give Investors the 'Laser'

Treatment
Executives overuse a pet phrase meant to impress investors

By Noah Buhayar

When Liam McGee, chief executive officer of Hartford Financial Services Group,
wants to emphasize his commitment to creating shareholder value, he pulls out
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the precision weaponry. “Our team is laser-focused on execution,” he said in a
March 2012 conference call with investors and analysts, laying out plans to
divest units and halt some annuity sales. It was one of at least six events in the
past two years at which McGee hauled out the lasers.

We have a “laser focus on value

creation.” —A.G. Lafley, CEO,
Procter & Gamble

He’s not alone. At companies ranging from children’s book publishers to

organic-food purveyors, CEOs are increasingly training powerful beams of light
on their targets. The phrase “laser-focused” appeared in more than
250 transcripts of earnings calls and investor events this year, according to data
compiled by Bloomberg, on pace to eclipse the 287 in all of 2012. “It’s business
jargon,” says L.J. Rittenhouse, CEO of Rittenhouse Rankings, who consults with
executives on communication and strategy. “What would a more candid
disclosure be? ‘We are focused.’ What does a laser have to do with it?”

John Foraker, CEO of organic macaroni-and-cheese maker Annie’s, told

investors last month that his company is “laser-focused on executing at a high
level through the remainder of this fiscal year in order to achieve against our
short- and long-term strategic objectives.”

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The company is “laser-focused on
executing at a high level through
the remainder of this fiscal year in
order to achieve against our short-
and long-term strategic
objectives.” —John Foraker, CEO,
Annie’s

Richard Robinson, CEO of children’s book publisher Scholastic, in July

explained efforts to help school districts prepare teachers, assemble their book
collections, and aid struggling students: “We are laser-focused on capitalizing on
the significant opportunities, the changing buying behavior, and new needs in
the classroom.” He was highlighting the increased use of Scholastic’s digital
programs, Kyle Good, a spokeswoman for the company, wrote in an e-mail.
“Everyone at Scholastic IS laser-focused on getting these programs and learning
materials into the hands of more students and teachers nationwide because
there is a tremendous need to help raise student achievement.”

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 “Our team is laser-focused on
execution.” —Liam McGee, CEO,
Hartford Financial

A few CEOs have powered up their beams amid pressure from hedge funds.
Hartford chief McGee’s comments came after John Paulson urged him last year
to “do something drastic” to boost returns. Hartford spokesman Shannon
Lapierre says McGee’s use of the phrase coincided with efforts to focus the
company’s business and that he hadn’t used it in a couple of quarters. In
October, Bob McDonald said his company, Procter & Gamble, was “focused like
a laser” on productivity and innovation, months after activist investor Bill
Ackman took a $1.8 billion stake. The maker of Tide and Pampers brought back
former CEO A.G. Lafley in May. Lafley told investors at a conference on Sept. 4
that P&G has a “laser focus on value creation.”

“We are laser-focused on

capitalizing on the significant
opportunities, the changing
buying behavior, and new needs

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 in the classroom.” —Richard
Robinson, CEO, Scholastic

David Larcker, a professor at the Stanford Graduate School of Business who has
studied deception on investor conference calls, says that when executives “start
using a lot of jargon, it makes you wonder about the believability.” Rittenhouse,
who analyzes shareholder letters for an annual report on CEO candor and
reviews about 100 conference-call transcripts each year, has found that
companies that use “fact-deficient, obfuscating generalities” have worse share
performance than more candid companies.

One manager who has avoided the phrase is John Ambroseo, CEO of Coherent.
When asked in July on a conference call about his company’s move into a new
market, he said, “We’re very focused on a select set of customers. We’re not
trying to sell to everyone, everywhere.” Coherent’s product: lasers.

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