Taking Care Of Business 082808

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Michael Dougherty, Chairman & CEO, Kindermusik International -- presentation to 1st Annual Carolinas Chapter Annual meeting in Pinehurst, NC / August 28, 2008

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Taking Care Of Business 082808

  1. 1. Carolinas Chapter Annual Meeting ESOP Association Pinehurst, NC August 28, 2008
  2. 3. <ul><li>30 years children’s music education leader </li></ul><ul><li>1997 – 2001 turnaround </li></ul><ul><li>New management team </li></ul><ul><li>OBM/incentive compensation </li></ul><ul><li>Product expansion </li></ul>
  3. 4. <ul><li>Turnarounds are hard on people </li></ul><ul><li>Employees do not receive enough reward </li></ul><ul><li>Decisions: EBITDA </li></ul><ul><li>We do not control our destiny </li></ul>
  4. 5. <ul><li>2002 seller financed 100% ESOP </li></ul><ul><li>50 Employee Owners </li></ul><ul><li>2008 refinance </li></ul><ul><li>Stock price CAGR 10.3% </li></ul><ul><li>$750k already paid out to ex-EOs </li></ul><ul><li>Exceptional transparency: OHD </li></ul>
  5. 6. <ul><li>We can be proud of what we add to our world! </li></ul><ul><ul><li>Happy children </li></ul></ul><ul><ul><li>Great music </li></ul></ul><ul><ul><li>Education </li></ul></ul><ul><ul><li>Charitable outreach </li></ul></ul><ul><li>But how should we feel about what we subtract from our planet? </li></ul>
  6. 7. <ul><li>Carbon emissions? </li></ul><ul><ul><li>Several million miles of product transport and employee travel every year </li></ul></ul><ul><li>Waste? </li></ul><ul><ul><li>Packaging </li></ul></ul><ul><ul><li>Shipment filler </li></ul></ul><ul><ul><li>Non-recyclables </li></ul></ul><ul><li>Byproducts of production processes? </li></ul>
  7. 8. <ul><li>Mindful of stakeholders: </li></ul><ul><ul><li>consumers </li></ul></ul><ul><ul><li>communities </li></ul></ul><ul><ul><li>environment </li></ul></ul><ul><li>Footprint: what we take from communities </li></ul><ul><li>Balancing decisions </li></ul><ul><ul><li>EBITDA, share price & community footprint </li></ul></ul>
  8. 9. <ul><li>Becoming a founding B Corporation </li></ul><ul><li>Shift to digital product forms </li></ul><ul><ul><li>Downloads vs. CDs </li></ul></ul><ul><ul><li>Curriki (open source web) vs. Teacher’s Guides </li></ul></ul><ul><li>Packaging overhaul </li></ul><ul><li>Public transportation subsidy </li></ul>
  9. 10. <ul><li>Corporation: maximize return to shareholders </li></ul><ul><li>ESOP: maximize ESOP share price </li></ul><ul><li>“ Beneficial” Corporation: balanced considerations into Articles of Incorporation </li></ul>
  10. 11. <ul><li>MY LIFE’S THREE STAGES </li></ul><ul><li>MY COMPANY’S THREE STAGES </li></ul><ul><li>Grow & Learn </li></ul><ul><ul><li>health </li></ul></ul><ul><li>Build Relationships </li></ul><ul><ul><li>people </li></ul></ul><ul><li>Seek Significance </li></ul><ul><ul><li>legacy </li></ul></ul><ul><li>Taking Care of Business </li></ul><ul><ul><li>survival and financial health </li></ul></ul><ul><li>Taking Care of People </li></ul><ul><ul><li>building wealth for employees </li></ul></ul><ul><li>Taking Care of Communities </li></ul><ul><ul><li>mindful of our net impact </li></ul></ul>
  11. 12. <ul><li>www.bcorporation.net </li></ul><ul><li>www.worldchanging.com </li></ul><ul><li>www.netimpact.org </li></ul><ul><li>www.sustainablelifemedia.com </li></ul><ul><li>www.ted.com </li></ul>
  12. 13. <ul><li>A profitable company benefitting customers and employee owners? (CHECK!) </li></ul><ul><li>Could we redefine our private enterprise? </li></ul><ul><ul><li>private wealth AND public benefit </li></ul></ul><ul><li>Can we be a positive force for lasting change? </li></ul><ul><ul><li>Leadership in showing others the way </li></ul></ul><ul><ul><li>Accomplishing the highest NET impact </li></ul></ul>
  13. 14. Carolinas Chapter Annual Meeting ESOP Association Pinehurst, NC August 28, 2008

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