Life Insurance

I'd be a better investor if I had more in common with Michelle Leder. What I like to read most is modern fiction, such as Jeffrey Eugenides' Middlesex or Keri Hulme's The Bone People, or biographies, such as Nien Cheng's Life and Death in Shanghai. [Get lots of great reading ideas on our Eclectic Library discussion board.] Michelle Leder, though, seems to most enjoy reading the footnotes of annual reports.

That's good for her -- and it's also good for us, because she runs a blog, www.footnoted.org, where she shares interesting tidbits she runs across. Here are some examples. See if any of these firms are ones in which you've invested, or are considering as investments. Regardless, you'll learn about some red flags to watch out for.

Leder reported that (NYSE: HEW) filed an 8-K form granting 65,000 restricted shares to four company bigwigs and "change in control" severance agreements to some 24 executives. She notes that, "The agreements are fairly standard.... But they're probably worth paying attention to, since we've all seen this type of pattern -- expanding the number of folks covered by change in control agreements -- as an almost routine event when a company is prepping itself for a sale."

Newly public (NYSE: HUN) is being generous with "tax gross-ups," which many investors may find distasteful. They happen when a company gives executives various perks -- the value of which is taxable. The firm then gives the executives funds to cover the tax impact. Does this seem like an excellent use of shareholder money? I didn't think so. Leder notes that, "President, CEO and Director Peter Huntsman received $789,000 in tax gross-ups in fiscal 2005."

You can learn a lot about a company by checking out the fine print in its reports. That's often where it tucks away information it would rather you didn't find.

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