CEO & Corporate Reputation

1. CEO & Corporate Reputation Jeanette Dyhre Kvisvik Manager, Burson-Marsteller, Norway Hotel Nordica, Reykjavik, Thursday 21. September

2. CEO Reputation “Despite the size and complexity of modern corporations, the person in charge still sets the tone, defines the style, becomes the company’s public face.” Fortune, November 18, 2005 “It takes a lifetime to build a reputation, and only a short time to lose it all.” Joseph Neubauer, CEO of Aramark, BusinessWeek, September 23, 2002

3. Corporate Reputation “ If you lose dollars for the firm by bad decisions, I will be understanding. If you lose reputation for the firm, I willbe ruthless.” Warren Buffett

4. How to build trust Stakeholder map- The various needs for communication The media Public opinion Political society CEO & company Internally Financial society

5. Agenda • Global Survey- CEO Capital and Corporate Reputation 2005 • Norwegian Survey- CEO and Corporate Reputation 2006 • An example- Norsk Hydro- Norways second largest oil company

6. Building CEO Reputation - Global • Now in its fifth wave, Burson-Marsteller’s first CEO Reputation Study was conducted in 1997 • The research was conducted online with the Economist Intelligence Unit (EIU), a world leader in global business intelligence and the business–to–business arm of The Economist Group. • The sample includes over 600 business influentials from 65 countries: • 146 CEOs • 146 senior executives • 188 financial analysts • 103 business journalists • 102 government officials

7. The Sample

8. CEO Reputation

9. How much does CEO Reputation Matter? • On a global basis, the CEO is held responsible for 47% of a company’s reputation. Europeans and North Americans attribute less responsibility to the CEO than do Asia/Pacific and Latin American influentials. 2005 CEO Contribution to Corporate Reputation

10. SCORECARD North America Buy or recommend stock Latin America Recommend company as alliance partner or good place to work CEOs Maintain confidence when share price lags How does CEO Reputation pay off? • Paying attention to what a CEO has to say and recommending the company as a preferred partner is the greatest benefits of having a good CEO reputation. The scorecard identifies regions and segments where scores are higher or lower than the average.

11. SCORECARD North/Latin America Demand high ethical conduct North America/Asia/Pacific Foster corporate governance Latin America Attract quality management team Financial Analysts Manage crises/downturns effectively What builds CEO reputation? • Credibility, attracting quality management and communicating a clear vision internally are the top three measures that shape CEO reputation. Delivering financial results is necessary for a CEO, but being credible is paramount. Top 12 of 20 CEO qualities

12. What builds CEO reputation- Europe • All business influentials agree that credibility drives CEO reputation. Demanding high ethical conduct ranked relatively low for European influentials, possibly because Europeans already expect strong ethics from their companies’ leaders. Top 12 of 20 CEO qualities = lower than total = higher than total

13. Top 25 Most Admired CEOs • Worldwide, Bill Gates is the most admired CEO by business influentials by a large margin. • Steve Jobs and Warren Buffett rank a distant second and third. • CEOs from North American, European and Asian/Pacific companies are represented on this most admired list.

14. Top 25 Most Admired CEOs: European Influentials • Among European business influentials, Bill Gates is the most admired CEO worldwide.

15. Corporate Reputation

16. SCORECARD Europe Stakeholder honesty and ethical behavior Asia/Pacific Honesty with stakeholders and good governance Communicating externally CEOs Focus on serving customers Financial AnalystsHonesty with stakeholders and effective internal communications High quality management Drivers of Corporate Reputation

17. Drivers of Corporate Reputation • Europeans rank external communication as the number one driver of company reputation. Honesty with stakeholders was ranked relatively low, possibly reflecting a European expectation for honest behavior. = lower than total = higher than total

18. SCORECARD Latin America Confidence that company will do the right thing Latin America/Asia Pacific Better relations with regulators/government CEOs Confidence that company will do the right thing and a higher share price. Payoffs of Good Corporate Reputation • Attracting top talent is the biggest payoff of developing a good corporate reputation. Other perceived payoffs include the ability to attract new business and increased customer loyalty.

19. Our Approach Reputation Report Card CEO Reputation Report Card Culture Capital Assessment Corporate Equity Analysis Seasons of a CEO Environmental Scan Competitive Platform Analysis/Benchmarking Corporate Reputation Research CEO Reputation Research Corporate Brand Valuator Fortune’s America’s Most Admired Companies Fortune’s Global Most Admired CompaniesReputation Index Brand Asset Valuator (BAV) Client Charter Desired Business Results CurrentReputationScorecards Insights Analysis Assessment Results and Measurement Creative Execution Strategic Programming Media Relations CEO Dance Card Investor Relations Employee & Constituency Engagement Web Communications Corporate and Internal Advertising Customized Training Programs Corporate Social Responsibility Corporate Identity Vision and Values CEO Platform Development CEO’s First 100 Days Integrated Communication Strategy Brand Definition Thought Leadership Strategic Stakeholder Messaging Leadership Development Rewards & Recognition Crisis Preparedness Measurement Planning Foundation Consulting Stock Price/Market Share Rankings & Scorecards Feedback Analysis Culture Quotient Recruitment & Retention Media Coverage/Penetration

20. CEO CAPITAL NORWAY 2005/2006

21. The Norwegian companies included in the study

22. Who are the respondents? 100 Investorer 90 Government officials Journalister Media 80 Investors 70 Analytikere/ Meglere 60 The only survey in Norway measuring reputation amongst Business Influentials Business journalists 50 Toppledere 40 Financial analysts 30 Executives 20 10 0 Source: Burson-Marsteller og Research International Topplederundersøkelse 2005 3

23. Who are not the respondents?

24. A good reputation is a rapidly increasing success factor in today's society The power of reputation Sum up CEO Reputation is responsible for 47 % of a Company Reputation which influences Profitability - Share price • Revenue • Turnover Other factors - Alliance/ merger partner - Recruiting and retaining - Power • In business • Politically Kilde: Burson- Marsteller analyse; Burson-Marsteller/ Economist Global CEO Capital, 2005

25. What is the most important driver when deciding to invest in a company? ?

26. 2005 2003 Quality of leadership and ability to adjust to change is the most important drivers when investing in companies What is most important when deciding to invest in a company? 48 Leadership 40 47 Adjust to change 25 38 Quality of products and services 38 38 Credibility 42 31 A trusted and good management is more important than financial situation Financial situation 25 29 Innovation 13 28 Specific skills or technology 17 27 Ability to recruit and retain 26 21 Loyal customers 29 16 Strong brand 22 14 Financial track record 23 10 Environmental focus 11 8 Social responsibility 12 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Data: Tall i % av base: 135/88. Figuren viser andelen som har svart 9-10 på en 10-delt skala for betydning for valg * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

27. 2005 2003 In addition, the CEO reputation affects other key success factors for the company… To what extend does your opinion of a CEO affect your will to..... 76 Recommended as a alliance/merger partner 70 74 Believe in company despite negative media coverage 34 71 Potential employer 69 70 Buy stocks in the company 72 Believe in company despite share price develops below index 61 62 46 Be informed of company's development 39 34 Buy company's products and services 24 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Tall i % av base: 135/88. Figuren viser andelen som har svart 7-10 på en 10-delt skala for grad av påvirkning * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

28. Is there a correlation between the CEOs reputation and the company's reputation? ?

29. There is a strong correlation between the CEOand the company reputation Correlation The correlation proves that the trust in the CEO is crucial for a company’s reputation * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

30. Big changes in companies reputation since 2003 shows that the reputation is in motion 100 Reputation is easily broken down in a crisis, but the reputation may be restored within 2 years 75 Company reputation 50 25 0 0 25 50 75 100 CEO Capital Tall i % av base generelt inntrykk: 90. Figuren viser andelen som har svart 7-10 på en 10-delt skala for tillit (x-aksen) og andelen som har svart 7-10 på en 10-delt skala for inntrykk (y-aksen) * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

31. Norway 2005 2,2 Global 2005 3,2 0 0,5 1 1,5 2 2,5 3 3,5 4 Reputation recovery is possible, but demands focus Average in years Comparison of the two studies shows that the time to recover the reputation is shorter in Norway than globally Data: Tall i % av base: Norge 107 som har svart, Globalt: Ca 600 * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

32. What measures must be taken to build reputation? ?

33. To build and sustain a company's reputation, the focus must be on ethics, good leadership and results… 2005 Ethics 87 Trust in CEO 79 Financial results 79 Quality products and services 78 Customer focused 76 Attracts and retain good employees 74 The focus on ethics is very high in Norway compared to the global and European results Communicates effectively externally 73 Adjust to change 71 Corporate governance 66 Innovative 64 Social responsibility 55 Industry leading 54 A good place to work 53 Environmental 52 Stakeholder openness 52 Communicates effectively internally 49 Company size 14 Global company 12 0 20 40 60 80 100 Data: Tall i % av base: 135. Figuren viser andelen som har svart 5-6 på en 6-delt skala for viktighet * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

34. 2005 2003 … the same criteria is also the most important to buildand sustain a CEOs reputation How important is it for your trust in the CEO that… 71 Sets high ethical standards 62 66 Creates good financial results 58 63 Have a good management team 60 When the company reputation and the CEOs reputation depends on the same criteria, it shows how the company and the CEO is identified with each other Have the ability to adjust to changes 62 54 58 Manage crisis in a credible way 50 Turn company's strategies into action 57 60 Informs of company's strategies and visionsto employees 53 52 38 Handles the media in a credible way 44 38 Focuses on customer relations 38 36 Retain and develops employees 37 Informs of company's strategiesand visions externally 31 29 30 Focuses on social responsibility 22 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100 % Base: Tall i % av base: 135/88. Figuren viser andelen som har svart 9-10 på en 10-delt skala for viktighet * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

35. Business newspapers are the most important communication channel for CEOs and companies Fra hvilke kilder lærer du mest om toppledere? TV, radio and the internet has become more important as a reputation communication channel the last two years due to a rapidly increasing focus in business news In addition, conferences, seminars and other meeting arenas has increased in importance Data: Tall i % av base: 135/88. Figuren viser kilder der man lærer mest om den enkelte toppleder * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

36. …to acquire the trust of the employees 7 months (0) …to establish good relations for the company 10 months(0) …to improve the financial results 17 months (+1) 0 3 6 9 12 15 18 Months …to attract a management team with the right competence 7 months (-1) …to establish the company's visions and strategies going forward 8 months (+1) …to turn a negative trend around 15 months (+1) Tall i % av base: 135/88 Tall i parentes: antall måneders endring fra 2003 To build trust, a CEO must show the ability to take action within the first 6-8 months in the position… * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

37. The demands for the CEO ability to take action and show results are increasing Do you believe that the chairboard fires their CEOs too fast? 2003 2005 In time In time 55% 32% Too late Too early Too early 49% 16% 16% Too late 30% Data: Tall i % av base: 135/88 Twice as many business influentials than in 2003 believes that CEOs should be fired earlier The percentage that believe the CEO should be given more time is down from 49% to 16% * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

38. Zooming in on Norway's 2nd largest company * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

39. 2005 2003 Hydro has the best reputation amongst business influentials Company reputation Hydro 88 79 78 50 78 27 72 73 Hydro on top Potential reasons: • Good results • Strong management • High ethical standards • High profile- 100 years 72 69 60 56 24 53 28 46 42 41 39 33 12 27 78 25 16 13 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Data: Tall i % av base inntrykk: 135/88. Figuren viser andelen som har svart 7-10 på en 10-delt skala for inntrykk * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

40. 100 100% Investors 93 Analysts 90 90% Journalists 81 Executives 79 80% Government 70% 60% 50% 40% 30% 20% 10% 0% Hydro Hydro has a solid and evenly divided trust amongst key stakeholders Company reputation – divided by stakeholders Investors have full confidence in Hydro, but Hydro should strengthen its position amongst governmental officials and analysts * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

41. 92 37 91 79 73 55 73 71 49 68 58 66 27 65 48 65 65 65 52 37 27 37 35 75 33 31 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Data: Tall i % av base: 135/88. Figuren viser andelen som har svart 7-10 på en 10-delt skala for inntrykk The Hydro CEOs reputation is the second highest amongst the measured companies Trust in CEO 2005 2003 Hydro Eivind Reiten is amongst the countries most trusted leaders and has increased the trust the last two years * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

42. 100 100% Investors Analysts Journalists 94 Executives Government 92 90 90% 86 80% 70% Hydro The trust in the Hydro CEO varies more amongst the business influentials than of the company Trust in CEO- Divided by stakeholders Eivind Reiten has a higher trust amongst analysts than the company itself (79% vs. 94%) Media and governmental officials has the lowest trust amongst stakeholders * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

43. Trust in CEO andcompanyreputation in 2003 Korrelasjonsområde Svært godt Hydro Hydro had a high trust in both CEO and in company in 2003 Inntrykk av selskap Svært dårlig Tillit til toppleder Svært lav Svært høy Tall i % av base : 88. Figuren viser andelen som har svart 7-10 på en 10-delt skala for tillit (x-aksen) og andelen som har svart 7-10 på en 10-delt skala for inntrykk (y-aksen) * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

44. Trust in CEO andHydrosreputation has increased further from 2003 to 2005 Korrelasjonsområde Hydro Hydro is number one Danger- The only way is down * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

45. That’s all folks! Applause

46. Back up

47. Corporate Reputation “In today’s world, where ideas are increasingly displacing the physical in the production of economic value, competition for reputation becomes a significant driving force, propelling our economy forward.” Alan Greenspan Federal Reserve Chairman

48. 2005 2003 Hydros toppleder har meget høy kjennskap blant norske beslutningstakere Kjennskap til toppleder Hydro Vår analyse viser at kjennskap er en forutsetning for topplederens tillit Data: Tall i % av base : 135/88. Figuren viser andelen som har svart kjenner svært godt/lite grann til * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

49. Myndigheter og journalister har best kjennskap til Hydros toppleder Kjennskap til toppleder- fordelt på målgrupper 100% Investor 97 97 Megler/analytiker Journalist Toppleder 92 Myndighet 90 90% Hydro har lavest kjennskap blant meglere/analytikere, og forholdsvis lav hos investorer og andre ledere 84 80% 70% Hydro * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

50. Investor Megler/analytiker Journalist Toppleder Myndighet Tillit Kjennskap Tillit Kjennskap Tillit Kjennskap Tillit Kjennskap Tillit Kjennskap Tilliten til toppleder versus kjennskap til toppleder Tillit til toppleder og kjennskap til toppleder - fordelt på målgrupper Godt samsvar mellom kjennskap og tillit Norske myndigheter har lavere tillit enn kjennskap til Reiten , mens det er omvendt for meglere og analytikere * Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005