Man and The STREET.

Shareholders ask the darndest questions sometimes. Here's how a few CEOs deal with them.

A SIMPLE OBSERVATION about the recently televised World Series sums it up nicely. This year, for every ad featuring sports cars zipping up country roads or beer steins filled to the brim, another touted the advantage of an online or full-service trading account.

As Arthur Levitt, chairman of the U.S. Securities and Exchange Commission pointed out in September, "Our markets are more a part of America's consciousness than ever before.... Even truck and beer commercials seem to be outnumbered by advertisements for online trading and investment advice."

A growing number of smaller investors has made the stock market something of a national pastime. According to the Securities Industry Association, the number of individual investors rose from 42.4 million to 78.7 million between 1983 and 1999. Over the same period, the percentage of U.S. households that owned equities went from 19 percent to 48.2 percent.

For CEOs, that makes communicating with investors a whole new ballgame. To find out just how these integral shifts are influencing shareholder communications, CE asked several CEOs how the questions they're hearing from shareholders these days differ from inquiries of years past. They say investors have grown more perceptive and sophisticated -- which means CEOs must be more capable than ever of providing clear answers.

Richard E. DAUCH

Chairman, CEO, and president American Axle & Manufacturing Annual Revenue: $2.95 billion

Today's shareholders are more sophisticated and knowledgeable than their counterparts of 10 years ago. They're better educated and ask more complex questions.

Shareholder questions are more incisive. Our investors ask about our strategic plan, with an emphasis on a balance between long-range and short-range planning, growth, and investment required. They're interested in bottom-line return on investment. They want to know what our company's portfolio is with respect to operating performance, debt/equity ratios, product positioning, customer diversity, prospective mergers and acquisitions, cost controls, and capital investment.

Today's investment world is more analytical than it was 10 years ago. Manufacturing companies like American Axle & Manufacturing have to work smarter and leaner in a global marketplace. We must prove to present and potential stockholders that we are a good investment capable of thriving in the highly competitive 21st-century marketplace.

T.D. GROWCOCK

President and CEO

Manitowoc

Annual Revenue: $805 million

Today, our individual investors have access to as much, if not more, information about our company as our institutional investors had five years ago. Everyone is much better informed--and that's a great thing.

Over the past five years, the quality and sophistication of the questions we receive from individual shareholders has increased. This is due, no doubt, to the Internet and the level playing field that instant information creates. Our individual investors now have full access to our quarterly conference calls in real time, as well as up-to-the-minute fundamental information on our Web site. They've come to expect high-quality company information, and they want it fast.

In terms of specific questions, we're getting asked for greater detail than ever before, from individuals as well as buy-and-sell-side analysts. Along with the typical questions on market share and growth rates, investors also want to know about margins, operating improvements, capacity utilization, overhead absorption, and EVA [Economic Value-Added] progress. It takes more effort from my financial staff and from me as CEO, but ultimately, a more knowledgeable shareholder base is good for our company.

Leo LIEBOWITZ

Chairman and CEO, Getty Petroleum Marketing

President and CEO, Getty Realty

Annual Revenue: $662 million

QUESTIONS TEND to be shorter-term focused relative to improving financial results, operations, and shareholder value. [There are] greater comparisons to competitor results and changes in share prices, and what/how management is doing vs. prior communications.

John SHALAM

Chairman and CEO, Audiovox

Annual Revenue: $1.16 billion

Overall, shareholders' questions today as compared to five or 10 years ago are pretty much the same, and relate mostly to the performance of the company, and the outlook for earnings.

Of course, the nature of our business has changed dramatically in the last 10 years, and today sales of our cellular products exceed 80 percent. Accordingly, we are getting many more specific questions about the technology of our phones, and there is much interest in new communications features, such as Internet access from a hand-held phone, Web browsing, short messaging, etc.

We find that many of our shareholders have become much more knowledgeable and well-informed as to the nature of the cellular phone and wireless communications industry. Besides that, we find shareholders are more aggressive and demanding in insisting that the company should launch share repurchase programs or create stock splits and take other measures to stimulate the price of the stock.

Dan AMOS 

President and CEO AFLAC 

Annual Revenue: $8.64 billion

Shareholders today are more informed than ever before due to the huge amount of information available to them through the Internet. The nature of the questions hasn't changed as much as shareholders are now asking more questions than ever before. Greater access to information has given them more 'food for thought' and, therefore, more reasons to ask questions.

Lawrence A. WEINBACH

Chairman, CEO, and president, Unisys

Annual Revenue: $7.54 billion

Individual shareholders ask questions that seem to presuppose continued steady, longer term growth in most sectors, with investment risk reserved for certain sectors...like Internet startups where the return can be as spectacular as the loss.

However, the paradigm shift to electronic business is permeating all sectors of the business world, and on a global basis. We are entering a new wave of development where the Internet is fundamentally changing the social, political, and economic infrastructure, creating incredible new opportunities--and new risks. The rules have changed, and old investment questions need to be answered within a totally new context.

C. Scott GREER

Chairman, CEO, and president Flowserve

Annual Revenue: $1.06 billion

INSTITUTIONAL INVESTORS haven't altered their questions that much. They continue to be quite analytical. A significant shift has occurred, however, in the information sought by individual investors. These people are becoming savvier through the many financial sites on the Internet.

Queries from both types of investors extend beyond annual sales data and cash flow, and delve into such areas as management compensation and how it's aligned with the interest of shareholders. They ask for specific details about the company's growth plan. They want to understand how the Internet plays into the growth strategy, not only in terms of business-to-business applications, but also how the Internet will play a role in devising new business strategies. They want to know about a company's global growth strategy.

Accessing the wealth of information provided by the Internet has not only given investors a much better knowledge about a company's business or the industrial sector, it has provided the forum for them to verify the information you've shared.

Michael W, WRIGHT

Chairman, CEO, and president SUPERVALU

Annual Revenue: $20 billion

I would say that a lot of the questions have become more short-term oriented, in the sense of having more of a focus on quarter-by-quarter than year-by-year performance.

There's also more of a focus on the macro changes within an industry. Because change happens so fast, there's a lot of speculation, even with old-line companies, about how the forces out there might change your business. We used to think about that more with technology companies--that somebody could come up with a better technology and all of a sudden they'd have a problem overnight. Now, things change rapidly in so many different businesses that there's a lot more focus on the global impact of what's happening in the industry and what effect it will have on your business three to five years from now.

There's also a higher bar for what is considered a growth company. I think that if you look back [several years], if someone was doing 15 percent a year, they were viewed as a growth company. Today, if you look at all of the companies that have come on in the technology and telecommunications area that have had growth rates of 30 percent or 40 percent a year, and the explosion of the market, the bar for what is considered a growth company has gone up significantly.