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Kathy Panagopouloskathy.panagopoulos@morningstar.com
Morningstar Names Max Messmer of Robert Half International as 2003 CEO of the Year

CHICAGO, Jan 06, 2004 – Morningstar, Inc. today named Harold M. (Max) Messmer Jr., chief executive officer of Robert Half International Inc. (RHI), as winner of its 2003 CEO of the Year award. The annual award recognizes a chief executive who has put his or her stamp on an industry, demonstrates independent thinking, and creates lasting value for shareholders.

“This year’s winner proves you don’t need to run a huge enterprise to be a great CEO,” said Patrick Dorsey, director of stock analysis for Morningstar. “Max Messmer thinks independently, demonstrating an ability to look past short-term pain for business opportunities that make sense for long-term growth. When Messmer became CEO, he decided to leverage the firm in order to buy back the company’s franchises. In about six years, he was successful in purchasing most franchises and retiring nearly all the debt. He had the foresight to see opportunities that could drive profitability and grow the firm’s market share.”

Founded in 1948, Robert Half International is a specialized staffing and consulting firm, and provides placement services for accounting, finance, and information technology professionals. Based in Menlo Park, Calif., the firm has more than 325 offices in North America, Europe, Australia, and New Zealand, and annually places 180,000 employees on temporary assignments.

Messmer became CEO in 1986 when he led a friendly buyout of the company from founder Robert Half. Since that time, the firm’s revenues have grown from $54 million to $1.9 billion. Messmer has succeeded in expanding the staffing firm’s core businesses, Robert Half and Accountemps, into a global company with several divisions, without sacrificing profitability. In 2002, Robert Half International ventured into corporate governance when it hired approximately 760 professionals, including 50 partners, formerly with Arthur Andersen’s internal audit and risk consulting practice. The deal, which resulted in the new business unit Protiviti, has made Half the leading internal auditor behind the Big Four – Ernst and Young, Deloitte and Touche, KPMG, and PricewaterhouseCoopers.

Under Messmer’s leadership for the past 17 years, the company has grown significantly:

  • Since 1986, internally generated revenue has increased at a compounded annual rate of 20 percent.
  • Half’s stock has increased 23 percent per year since 1986, compared with 12 percent for the SandP 500 Index.
  • Returns on invested capital increased to 25 percent by the mid-1990s from 10 percent to 12 percent in the late 1980s.
  • Protiviti, which was expected to be a drag on revenues until 2004, broke even in the third quarter of 2003, after just one year. In addition, the new business unit is bringing in leads for the international side of the firm.
  • Ten years ago, Accountemps and the permanent placement business accounted for 90 percent of Half’s revenues. New ventures such as Office Team, Robert Half Technology and Robert Half Management Resources accounted for 50 percent of revenues in 2002.

“Messmer’s long-term thinking has benefited the company. His management team has avoided woes that have befallen competitors, such as expensive, giant acquisitions that have hurt Adecco and Vedior or bitter franchise relations that have affected Manpower,” Dorsey said. “In addition, the team has weathered criticism of short-term negative effects on the stock’s earnings per share when they initially created Protiviti, for the long-term profitability that the new business unit has brought to the company.”

Before he led the team that bought Robert Half International in 1986, Messmer was president of Boothe Financial, a real estate and leasing firm based in California.

Other contenders for Morningstar’s 2003 CEO of the Year award were: James Tobin, CEO of Boston Scientific (BSX), Richard Kinder, co-founder and CEO of Kinder Morgan Energy Partners (KMP), and Brian Roberts, CEO of Comcast (CMCSA).

This year’s nominees are not necessarily well-known, but all four have led their companies with independent thinking that has increased shareholder value during the last several years.

Tobin joined Boston Scientific, a medical-device firm, in 1999 after a difficult year that included a major product recall and a Justice Department investigation. Since that time, he has dramatically improved the company’s gross margins, operating margins, and returns on capital.

Kinder and Bill Morgan (now retired) founded Kinder Morgan Energy Partners, one of the country’s largest owners and operators of energy pipelines, in 1997. Kinder has avoided heavy bets on energy trading, choosing to invest in hard assets. Kinder Morgan Energy Partners’ shares have nearly tripled since 1998, and cash distributions to shareholders have more than doubled. This is the second time Morningstar has considered Kinder for its CEO of the Year award.

In 1997, Brian Roberts, of Comcast’s founding Roberts family, became CEO of the firm, which is the largest cable operator in the United States with 21 million subscribers. Under his leadership, the company’s EBITDA margins increased from 22 percent to 33 percent during the past year, and operating cash flow per subscriber has increased from $205 to $274. His long-term track record is solid – producing annual shareholder returns of 20 percent since 1990.

The Morningstar CEO of the Year award, introduced in January 2000, recognizes leaders who maximize shareholder value and demonstrate independent thinking. Winners are chosen by Morningstar analysts, based on the company’s independent research.

For the complete report, go to:

For a complete list of past and current winners, go to:

About Morningstar, Inc.
Chicago-based Morningstar, Inc. is a global investment research firm, offering an extensive line of print, software, and Internet-based products and services for individuals, financial advisors and institutions. The company is a trusted source for investment information, data, and analysis of stocks, mutual funds, exchange-traded funds, closed-end funds, 529 plans, separate accounts, and variable annuity/life subaccounts.

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