While corporate compensation plans have become outlandish at many companies, there are some good guys out there. Just got my Fastenal annual report and proxy, and their compensation plan should be FAST-ened to every compensation consultant's handbook ;-)
Robert Kierlin, the CEO, owns 10% of the company. It's his view and that of the Board that the president and officers should be modestly compensated by the company and that their financial rewards should come in large part by the increases in the value of the stock held by them. With a salary of $122,000 or less over the last 15 years and the strong performance of Fastenal stock, it is easy to see why Kierlin always shows up high in the ratings of managers evaluated based on performance for pay. His rating will likely go up this year, as he requested that his salary be cut this year to $63,500, since he spent less time on company affairs in 2001. Talk about being fair and square, but what would you expect from someone dealing with nuts and bolts? ;-)
The stock option plan that the company put in place a couple of years ago for the employees is also fair and square, since Kierlin backed the stock option plan with his existing shares in the company. He wanted the plan to align the interests of the employees with shareholders and allow the employees to accumulate some wealth, but since he is backing the option plan with his own shares, the company won't have to issue any new shares when the options are exercised, so there will be no dilution.
The stock appreciation rights that are provided to officers, who couldn't participate in the stock option program, provide for payment on exercise of the rights to be made in cash...so again no dilution.
With management acting like true owners, it's not surprising to see that Ruane, Cunniff has accumluated 13% of the company. While I recently trimmed back my FAST position due to its current valuation (pocketing a fast 90% gain over the last two years), I won't be so fast in parting with my remaining shares ;-)
splashduwn man, Phat pitches are very hard to find today, but where I've still been swingin' is in the healthcare areas (picked up more MRK, BMY and SGP yesterday. But, shhh, don't tell sewer rat that I called them phat pitches ;-) Also in the healthcare area, I've been swingin' at BDX and ESRX.
As far as mistakes, I make plenty of them. I always keep a list of my realized gains and losses over the last 12 months in front of me, so I can study my mistakes and try to learn from them. Over the past 12 months, I made a mistake in taking a final swing at ADCT (which had previously provided me with rich rewards and probably clouded my judgment). I totally underestimated the overcapacity in the telecom area. Other mistakes in the past year were with two of my small fry. I ended up taking 30% losses on both Koala and LoJack. Koala fell off the monkey bars when they took on too much debt for acquisitions. LoJack's earnings "disappeared" when the auto market turned soft last year. Also looks like I made a mistake in selling WD-40 when I did. I sold them for a tiny gain over concerns about their acquisition and concerns that they'd begin squeaking under a heavy debt load...but so far the stock has done nothing but go sharply higher...while still paying a hefty dividend. Ah, live and learn! ;-)