Business adviser Myles Martel believes it's likely that sometime this spring the chairman of a major corporation will invite a takeover bid by making a bad impression at his annual stockholders' meeting.
The chairman might come off as unimaginative, arrogant, intolerant of criticism, incapable of explaining his company's strategy or unable to answer tough questions.Just the defects an opportunistic raider looks for.
Martel also is an opportunist - seeking out chief executives who don't want to let their guard down.
Best known as the man who shaped Ronald Reagan's performance in the 1980 presidential debates against Jimmy Carter, Philadelphia-based Martel is turning his attention from the political to the corporate arena. He's advising corporate chieftains on how to conduct their annual meetings.
Martel's advice does not come cheaply. He has charged companies $7,500 to $19,000 for 15 to 58 hours of consulting. This spring, he's working with seven companies. He won't say which ones.
The importance of the annual meeting, according to Martel, cannot be overstated. It's the one time each year when shareholders see the chief executive on his own and form an image of his effectiveness. If the chairman doesn't make a good impression, particularly if his company is ailing, it's likely he won't be around to run the next meeting.
Martel sees similarities in preparing the nation's chief executive and a corporation's chief executive, but he thinks the corporate chief may have a tougher task.
Shareholders often don't show a CEO the deference the public shows a president, and shareholders usually are better informed on the issues to be discussed, he said. And corporate executives of-ten are uncomfortable in a public setting.
They may be technocratic, hot-tempered or - worst of all, in Martel's view - arrogant. These chief executives tend to see their shareholders as annoyances and often attempt to limit their own media exposure as well, he said.
"Many chief executives are more facile in talking about numbers than feelings, such as pride or hope. Many of them sense that talking about feelings is a weakness. Yet their job at an annual meeting is largely one of motivation."
Most of Martel's time is spent helping prepare executives for the traditional question-and-answer sessions, particularly on what he calls the "banana peel" questions.
Martel divides those into 12 types: hostile, leading, loaded, multifaceted, value, vague, non-question, picayune, speculative, hypothetical, either/or and yes/no.
Each requires a slightly different response. The secret, he advises, is to listen to the question and dissect it. That's particularly handy if the chairman doesn't want to answer the question.
For example, take a question such as: "Mr. Chairman, why do you continue to operate your South African subsidiary, sanctioning the apartheid system, when this unit provides no tangible sales or profits to the corporation?"
"That contains several premises," Martel said. "The idea is whether the chairman should talk about those premises or answer directly. Sometimes by analyzing the questions, he cannot only give a more persuasive response, but it gives him time to process an answer.
"Hostile questions can often be hidden opportunities if you limit your exposure, show grace under fire and find the positives that go with a negative question," Martel said. "That is the best opportunity to score in an entire meeting."
If it seems as though Martel approves of having chairmen dance around questions, to an extent, it's true. After all, in his view, the annual meeting's most important purpose is to cultivate an image, and total frankness sometimes can cause more harm than good.
"I am a believer you should always tell the truth. No exceptions," he said, emphasizing that includes admitting when you don't know the answer to a question. "However, you don't always have the obligation to be totally open. I help chief executives to understand the difference."
The most difficult type of meetings to control can be the ones where one angry shareholder after another steps up to blast the chairman, often in highly personal terms, for a series of financial losses or blunders.
According to Martel, the executive can either fan the flames or put them out with a few words or actions, all of which he must plan on his feet.
His words of advice to chairmen: Don't overengage the hostile questioner. Don't debate. Shift eye contract elsewhere. Try to search out somebody who seems more friendly. If the person seems to want to blow off steam, rather than hear an answer, don't be afraid to cut off the questioner. And, in extreme cases, the chairman shouldn't be reluctant to turn off the microphone or even have someone ejected.
But a chairman who cuts off questioners - particularly if he is hot-tempered to begin with - can be perceived as evasive and arrogant.