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Quality Decisions

The measure of the Directors’ value to shareholders is the quality of their decisions- opines Jack Olcott. How confident are you that the right call is consistently made on behalf of your shareholders?

Jack Olcott   |   1st March 2013
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Possibly the world’s most recognized advocate, if not expert on the value of Business Aviation,...
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Quality Decisions:
Using the tools that best serve your shareholders.

The measure of the Directors’ value to shareholders is the quality of their decisions- opines Jack Olcott. How confident are you that the right call is consistently made on behalf of your shareholders?

Shareholders have a variety of reasons for selecting individuals for a position on a corporate Board. Perhaps it is the candidate’s industry knowledge- or connections with important leaders within markets being served by the corporation. The number of shares held by the contender for a Board position is an obvious factor- as is the relationship between the candidate and major shareholders.

It is not unusual for Boards to be packed with friends of the company’s leadership- particularly among smaller- more closely-held corporations. These attributes- and possibly others- surface when a vote is taken to replace- add or remove a Director.

At the end of the day- however- a person’s appropriateness to be a Director is measured by the quality of his or her decisions. What counts is the person’s ability to objectively address the challenges facing the Board- ask the tough questions- analyze relevant data and make the right call.

Making the right call regarding Business Aviation may seem obvious to those Board Members who have experience using business aircraft to reach new markets and to serve existing customers- or who know companies where this form of transportation has been particularly effective. For Directors unfamiliar with Business Aviation as a tool for expansion- however- decisions may be less obvious.

Corporations may attribute success to a variety of factors such as holding a dominant market share- achieving near oligopoly status- or offering unique products or services. People are fundamental to lasting success- however. When a company is able to employ people with applicable knowledge and skill- and deploy them in a manner that uses their talents and time effectively- success is likely. People and time are a corporation’s most valuable assets. When those assets are used efficiently- opportunities will be found- business will be nurtured and shareholders will be served.

The contrary position also holds true. When people are ineffective and their time is used inefficiently- market advantage can erode quite quickly. Boards that are reluctant to empower a corporation’s people with tools for mobility and growth are doing shareholders a disservice. Directors who are blinded by populous rhetoric that discounts—at times even demonizes—Business Aviation are failing to exhibit good judgment by not exploring the advantages that business aircraft provide.

Business Aviation is a multi-dimensional tool for maximizing the value of people and time. This form of transportation is available as charter- air travel cards- fractional ownership- time sharing with another company- and whole-aircraft ownership. Thus it is prudent for Boards to evaluate the many capabilities of Business Aviation as they decide the optimum way to leverage the company’s people assets and available time to serve shareholders. Perhaps the decision may be not to employ some aspect of Business Aviation- but the issues need to be vetted fully and objectively.

Many studies reveal that corporations using some form of Business Aviation are more successful than non-users. Public companies that employ business aircraft have a history of providing shareholders with greater growth in stock price and dividends than non-users. When accepted metrics such as revenue growth- net income growth- average return of equity- return on assets and employee growth are considered- companies employing Business Aviation outperform non-users. Companies that investors want to own are users of Business Aviation.

Corporations utilizing Business Aviation also score high in qualitative measures- such as Fortune magazine’s “Most Admired” list and its “100 Best Places to Work” designation.

A recent study by Nexa Advisors entitled Business Aviation—Maintaining Shareholder Value Through Turbulent Times—is particularly compelling. Published a few months ago and distributed by the National Business Aviation Association- the report concluded that among the public corporations listed within the S&P 500- those that used Business Aviation “…mitigated revenue losses and recovered more quickly than non-users…” during the Great Recession that besieged the USA between 2007 and 2012.

Business Aviation is a unique segment of air transportation that may be outside the sphere of expertize for some—possibly many—Board Members. Unfamiliarity with the subject or succumbing to populous jawboning is not the path to making quality decisions- however. Nor is it appropriate to dodge the issue. Experts are available to assist Directors with objective studies. The subject demands careful analysis.

That business aircraft provide value to a corporation is a matter of fact. The decision before Directors is how best to apply the attributes of business aircraft to serve shareholders.

Do you have any questions or opinions on the above topic?
Get them answered/published in World Aircraft Sales Magazine. Email feedback to: Jack@avbuyer.com

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