I BECAME the CEO of Todd Shipyards Corp. about nine years ago, long before the average person had ever heard of Enron, Global Crossing, Bell South or the Sarbanes-Oxley Act of 2002 (SOX), which the business scandals in those companies prompted.

Until that point, I had never led a public company, though once having been a certified public accountant, I was involved in the public reporting and other compliance requirements to which public companies are subject. I quickly made sure that I knew what I needed to know about running a public company, and as those company requirements have evolved, we've been forced to keep up with the changes. As a result, we've learned a lot about being a public company over these last nine years. And while Todd finances its operations from the cash flow it generates and doesn't currently utilize the public debt or equity markets to raise capital, I believe Todd still benefits from being public because of the discipline and investor perspective that are imposed on us.

Todd has been a public company since first offering shares of its common stock to the public in 1969. At that time, Todd was a much larger company, with a total of eight shipyards spread along the East, Gulf and West coasts of the United States. In fact, in 1984, Todd was ranked number 345 in the Fortune 500 on the basis of revenues.

Over the years, as the Navy's demand for new ships ebbed and the commercial shipbuilding industry moved to Asia in response to the higher costs of labor and regulations in the United States, Todd shrank to one shipyard (Seattle), where we do primarily ship repair, maintenance, conversion and some new construction. We continue to do a great deal of similar work for the Navy, although we perform a significant amount of that work at either Puget Sound Naval Shipyard in Bremerton or Naval Station Everett, in each case with considerable support from our Seattle shipyard.

I often receive telephone calls from individual and institutional shareholders who have questions about the company and/or opinions about how it should be run. I listen to their suggestions, and I try to help them understand our company and industry. Speaking of communicating with shareholders, in my view there's no excuse for the lies that the management of Enron, Adelphi and other companies told their shareholders. Investors lost millions of dollars because the leaders of those companies lacked integrity and intentionally misled investors about their companies' financial results and future prospects.

However, I believe that a handful of companies were in the extreme minority compared to the majority of public companies, whose managements are honest and truly want to do the right thing for their shareholders.

Personally, I never had any problem with a requirement to certify the financials - that was already part of my obligation as the CEO, whether in writing or in spirit. Thus, while SOX was enacted in part to restore investor confidence in the wake of these accounting scandals, which was a good thing, I believe that some of the detailed requirements enacted under SOX were an ill-considered overreaction to the abuses of a few rather than to a widespread problem among public companies.

After a few years of public companies footing the significant bill (both out-of-pocket and opportunity costs) for complying with SOX, we're now seeing and hearing proposals from many quarters to relax some of the SOX requirements. So, the pendulum may begin to swing back toward the center.

At Todd, we decided to use the SOX requirement as an opportunity to further streamline our business processes while also improving our internal controls. We developed a plan to achieve compliance with the help of our external auditors and our audit committee, followed it through to completion and have been found to be in compliance in each of our last two fiscal years. In the process of executing our plan, we found processes that needed streamlining and/or tightening and made many changes where we thought they would be beneficial.