The annual report is dead. At least that’s the traditional wisdom. Which is why so many companies have cut back their annual reports so dramatically.

Three years ago, we asked ourselves a different question: How could we make our annual report work harder? More specifically, how could we use the Eaton annual report as a centerpiece for an overall repositioning and rebranding program for our company?

The problem we faced: While many investors recognized Eaton’s amazing financial turnaround, few accurately understood what our company did. News media would often mischaracterize our business as an auto and truck industry supplier or, worse yet, a manufacturer of golf grips (a relatively small percentage of Eaton’s revenues).

Those misconceptions pigeonholed our company as a low-growth, rust-belt stock, and capped our price/earnings (P/E) ratio in the 13-16 range, despite posting 30+ percent compound earnings growth between 2002 and 2006.

Repositioning Eaton as a “power management” company

In order to change the conversation about Eaton, we knew we had to change the way we talked about ourselves. So we repositioned our company around the concept of “power management,” since we help the world use electrical, hydraulic and mechanical power more efficiently, reliably and safely.

More simply: we help buildings, machinery, planes, trains, busses, trucks and other vehicles run smarter and safer, and use a lot less energy.

Rather than spend millions of dollars on advertising (something we’ve never done), we decided to leverage our annual report—both print and online—as a primary vehicle for communicating that message.

Our 2009 annual report, “Think Powerfully,” demonstrates how we’ve translated the power management positioning into powerful messaging, linking Eaton to global megatrends—from reducing electrical consumption in buildings to producing more fuel-efficient trucks, cars and busses to making offshore energy exploration safer.

Analysts and media now embrace Eaton’s power management language, as typified by this bullish March 2010 feature segment of Jim Cramer’s “Mad Money” (

“Do we double down on great American manufacturers in the expectation that they can take share worldwide as our economy is the last man standing? That’s the question we have to ask with Eaton—a diversified industrial manufacturer of electrical components, hydraulic systems, fuel-efficient transmissions, hybrid engines for trucks, aerospace components—and what I regard as power management.”

Making sustainability integral to our message

To demonstrate that we “walk the talk” of contributing to a more sustainable world, Eaton is one of only a few large U.S. corporations that integrates our sustainability report into our annual, rather than publishing it as a separate document.

Our belief that “financial performance and social responsibility go hand in hand” has helped us to earn numerous awards for sustainability performance, helping us to further cement our power management positioning. 2010 recognitions included:

— placing No. 16 in Newsweek magazine’s Green Rankings;
— being selected by Ethisphere as one of the world’s “most ethical companies” every year since the list’s inception in 2007; and
— being ranked among China’s Top 10 green companies by Business Watch.

Investors “think powerfully” about Eaton’s stock, propelling us to the top of diversified industrial companies

Eaton’s power-management communications strategy has worked, led by our annual report and a highly coordinated investor relations effort. Despite the recent recession, Eaton’s stock today trades at a P/E of nearly 20 (among the top diversified industrial companies) and exceeded $100/share for the first time in mid-December 2010.

Nearly 95 percent of investors who participated in our annual survey rated the 2009 print annual report as excellent (71.5 percent) or good (23.5 percent). More than 88 percent of investors who participated in our annual survey rated the online version of our annual report ( as excellent (52.5 percent) or good (36.1 percent).

Eaton also tried something different this year to communicate the launch of the annual report to journalists covering the company. We produced and distributed a “Think Powerfully” themed canister containing an “Ode to the 2009 Annual Report” and an energy-saving crank-powered flashlight (sample enclosed in the submission).

As Eaton is primarily a business-to-business company, the annual report is also an invaluable marketing and business tool, and is often packaged with proposals to large corporations, organizations and government agencies.