Boone Pickens Homepage           Electronic Publishing Center
	REMARKS TO THE AMERICAN CHAMBER OF COMMERCE — JAPAN TOKYO JAPAN APRIL 19, 1989

[Handwritten addition: Money to OU.]

Thank you, Dick (Kropp) [Handwritten addition: Holdenville—]

[Handwritten addition: She run, and she serve. CBS guy in NY Wewoka—]

It’s a pleasure to be in Tokyo
          — Comments on the trip —(First time in Japan)
           [Handwritten addition: — Intro Marion, Sidney Tassin & Andrew Littlefair]

[Handwritten addition: Lots of young people at Mesa. avg. age 36]

I feel privileged to have this occasion to speak to both American and Japanese businessmen.
          — And, I thank the American Chamber of Commerce for affording me this opportunity.

[Handwritten addition: 2 weeks ago — Town Hall Club LA]

[Handwritten addition: Last week Kiwanis Club Abilene Tex.]
          — It’s times like [Text stricken: this] [Handwritten addition: Today] when I realize that I’ve come a long way since growing up in Holdenville, Oklahoma.

Some of you may know me as an oilman and a geologist; others know me as a shareholder advocate. I see myself as all three.
          — [Handwritten addition: Frog Joke]

Today I want to talk about shareholder rights and why they are becoming a [Text stricken: recognizable] [Handwritten addition: powerful] force in free markets around the world.

I recognize [Handwritten addition: some of] the difference[Handwritten addition: s] between our two countries and cultures, but I also see many similarities, particularly in business.

What has happened in Corporate America throughout the 1980’s will make its way into Japanese business in the 1990’s.

And, as Japan continues to compete in the world economy, the idea of shareholder rights will become more and more widespread.

As a matter of fact, shareholder rights will become a worldwide issue as all of us compete in a global economy.

I’ll begin with a little history on just what has happened in Corporate America in the last decade.

Shareholder rights didn’t start with America’s big businesses. They began with the entrepreneur.

Entrepreneurship has been very important for the American economy:
          — Entrepreneurs have created thousands of small businesses in the last seven years.
          — In turn, small businesses have created most of the 19 million new jobs that the U.S. has added since 1982.
           [Handwritten addition: —Unemployment about 5% the lowest in 18 yrs— no coincidence.]

But unfortunately, the entrepreneurial spirit has been slow to spread to America’s large corporations.

Corporate America started seeing changes just after World War II.
          — Our entrepreneurial founders were replaced by professional managers and slowly a “no-risk” mentality emerged.

We began to see a separation of ownership and control.
          — The people running the company were not the same ones who owned it.

And, many companies diversified out of the business they knew best.
          — Companies built huge bureaucracies.

These inefficient corporate bureaucracies stifled entrepreneurship and destroyed morale.

To correct its inefficiencies, Corporate America needs younger, entrepreneurial-minded leaders in charge.

That’s not going to happen overnight, because corporate managements have too much to lose.

No matter how poorly management performes, there’s little shareholders can do to remove them.

The way to restore competitiveness is to make managers accountable to the owners.

We must reestablish that shareholders are the owners of public companies, and managers are employees.

That’s one of the reasons why I formed the United Shareholders Association in August 1986 — to upgrade shareholder awareness.
          — Based in Washington D.C.
          — Non-profit; 60,000 members; 50 states
           [Handwritten addition: — Don’t overlook this movement. It has a broad bi-partisan support and it is a populist issue with 50 million people owning stock in public owned CO’s — that is a large group of voters.]

Corporate America is changing slowly... Shareholders are exercising their rights to force managements to perform.

Managers are working harder, making companies more profitable, more efficient, more competitive.

What we are seeing is a transformation of American corporations:
          — The goal[Handwritten addition: for American Bussiness] should be that size becomes meaningless, results are everything

Restructuring focuses management’s attention on what the company does best, the core business:
          — Goodyear example

Another issue that we’re addressing and one that I think Japan also will address is that of retained earnings.
          — Two major U.S. corporations — one with $10 billion and another with $5 billion.
          — That’s more money than they know what to do with, which has historically been a disaster.

Restructuring has helped FORTUNE 500 companies have the best profits ever but dividends are still near an all-time low... average 3.6% yield:
          — Japan dividend rates are even lower
          — They’re not returning profits to the owners

Average dividends for Fortune 500 companies are only 20% of cash flow... that’s $65 billion of $325 billion annually.

I started Mesa — the company I now am general partner of — in 1956 with $2,500.
          — Today, Mesa distributes more than $250 million annually.

Distributing a higher percentage of cash flow leaves plenty of cash for corporate growth.

Look at Mesa... distributed nearly $1 billion to our stockholders... doubled reserves [Handwritten addition: of oil] in 3 years, and still growing.

I believe the United States can avoid a market collapse and keep our economy moving forward. The way to do that is to distribute 50% of cash flow instead of 20%:
          — Dow would go above 3000
          — Prevent a recession
          — Upgrade standard of living for millions of Americans

You might ask, “Does this really affect that many people?”

If you include pension funds and trusts, half of all American households are directly affected... 50 mm shareholders.

In conclusion... shareholder activism in the United States is here to stay... this process will make our country more competitive and entrepreneurial than ever before.

[Handwritten addition: This is all very important to the Japanese as you are big players in America.]

We have the blueprint for success.

Management must realize that its job is to perform for the stockholders.
[Handwritten addition: Employees will do well as will the plants and cities.]

The formula is really that simple.

These are the issues that we’re dealing with and they are the issues that I think you’ll be hearing more about in Japan.

[Handwritten addition: END]

[Handwritten addition: 1. [Text illegible: Ma?]
2. Outside
3. [Text illegible: Ea?]]

[Text stricken: Presently, Japan has a relatively small number of individual stockholders.
          — You’ll see the number of small investors in Japan increase.
          — Companies such as NTT are going public
I’d be glad to hear what’s on your mind now, so I’ll entertain any questions you have on shareholders rights, the energy industry or anything else.
Thank you.]