I put AZO, in the upper 95th percentile of companies that follow these rules.
CEOs, directors, and many employees have taken it all though stock options and dilution of stock, many stocks have not only gone down, but lost value per share with record profits. Many of these stocks have increased in market cap ripping off those whom buy index funds. To remedy this situation I call for a new bill of rights to make CEOs treat their stock like gold - the owners that they are. The stock holders risked their money in the companies infancy, this initial risk may pass on through the centuries. Many of these CEOs and directors plan to clean-up over the next decade with stocks and options. I suggest you fire them fast and give them a new job cleaning up at a nursing home! Most people should not be investing in the stock market, but look to local businesses where you can become a large percentage owner. Google was started with a 40K investment from a friend, that friend might be able to obtain 50 percent of all shares in the company.
1) I call for the complete elimination of stock and stock option payments to employees, board members, and ceos. If 70 percent of the stockholders want to give stock options, do a 9/10 reverse split to only those shareholders that want them and put those 10 percent in a pool for options. The role of a company is to provide you with a paycheck, not to make you an owner. The company should use 10 percent of your paycheck, to buyback shares, and give those shares to you, even during the inital growth phase of the company when there are no earnings. You could even allocate how much you want in stock and how much you want in cash without any discount. There also might be personal or corporate tax benefits by giving you money in stocks or options. These tax benefits should be exploited to the maximum. The important thing is the company must actually buy and remove the shares from shares outstanding.
2) Automatic stock buybacks, 20-100 percent or more of earnings should be spent buying back stock regardless of p/e. A high p/e may signify future value of the company shareholders perceive. If conditions are favorable, it might be wise to buyback shares while there is debt, only if the 1/(p/e) is favorable to the tbond and interest rates. If the share price is too high, consider spin-offs, or create a new division in a growth area. THUS, EVERY YEAR, SHARES OUTSTANDING WILL DECREASE AND DILUTED SHARES OUTSTANDIND WILL EQUAL SHARES OUTSTANDING.
3) The company should strive for low or no debt. A company with no debt rarely goes out of business. A company with no debt will allow the company to get through the disasters or new additions. Cash on hand will never hurt too. If conditions are favorable, it might be wise to use debt to buyback shares, only if the 1/(p/e) is favorable to the tbond rate. If the country is running a hugh deficet, it can be expected the interest rates will rise in the future if they are not already high. At this time it may be wise to increase debt to buyback shares if the deficet/(debt+deficet) ratio is much higher than the interest rates. Much of this depends on the strength of companies cash flow. It is possible with high buyback rates that book value could go negative, since buying back shares does not add to assets. The hidden asset is the shares themselves that could be re-sold back for cash.
5) The CEO and management should not be the highest paid employees of the company. This management should preferably come from below. The employees below put in the time to understand the business. This, is the only advantage a public company has over a private company. They don't have to pay management so much. Directors should never get any stock, options, or wages. The directors get their money via the appreciation of the stock they own.
When it comes down to it...you don't know much about business and finance do you?
1. Without options and making the key decision makers income tied to the result of the stock...YOUR results as a shareholder will also suffer. Geez man this is basic.
2. Stock buybacks are nothing but a sham to increase earnings and to bolster the look of the earnings reports. Geez...basic #2.
3. Ok little to no debt. Good idea #1 although debt is a tricky thing...you can have good debt and bad debt.
4. You skipped #4 so it is a good thing you are not in an important position where attention to detail matters.
5. Directors should not be paid wages? The management team should not be well paid? The people who come from the company that "understand" the business should run it? Put one of those people that "understand" the business in front of an investment session on Wall Street and see how quickly they do not "understand" the business. Geez I hope nobody pays attention to you.