Four ways to improve shareholder value: improving financial performance, communicating, leadership, and change. (assessment of Communications Satellite Corp)(speech by Betty C. Alewine, president and CEO of COMSAT Corp)(Transcript)

Address by BETTY C. ALEWINE, President and Chief Executive Officer, COMSAT Corporation

Delivered to the Council of Institutional Investors, San Francisco, California, September 23, 1997

Good morning ladies and gentlemen. Thank you for giving me this opportunity to be here, with you this morning and to tell you about COMSAT's recent experiences. Two lessons from history took on greater meaning for me in the past year as CEO of COMSAT Corporation. One is from Ben Franklin who postulated that "there never was a good war or a bad peace." The other is from George Washington who said that "to be prepared for war is the most effective means of preserving peace." How does this relate to business? Well, let me tell you how it related to our business.

Earlier this year, COMSAT and a group of major shareholders averted an all-out proxy war. Together, we successfully avoided the potential disruption and damage to shareholder value of a prolonged proxy contest. The company and the shareholder group quickly realized that our overall objectives were the same, and it was in the best interests of shareholders to settle our differences. COMSAT had already begun to transform itself into a more financially sound, competitive enterprise, and we were in the process of implementing many of the strategic changes that the shareholders sought.

The proxy challenge and its successful outcome highlighted four major lessons that had already begun to have an impact on the way we run COMSAT. First, drive the business relentlessly to improve financial performance. Let no other goal stand in the way. Second, communicate - not once, not twice, but steadily with shareholders and the investment community. Third, exert strong and credible leadership from the Board as well as management. And, fourth, commit the company to continuous and well-focused change - never losing sight of competitive strengths. It's the only way to function in today's highly competitive markets.

As I begin my second year as the CEO of COMSAT, I can say that these principles are manifest now in everything we do. You must be wondering - if COMSAT was practicing these principles, how did we end up on the brink of a proxy challenge in the first place? And, what have we learned that will enable us to avoid future disputes?

So, let me tell you more about each of these lessons through the prism of COMSAT's experiences over the past year. The scars on our kneecaps might be instructive for other companies who are in the throes of great change, but at the same time, determined to improve shareholder value.

First, there is the absolute necessity of strong financial performance. In recent years, COMSAT had diversified from its core strengths in international satellite communications into …