No. of Recommendations: 28
This is a tidbit from the Wall Street Journal in its tribute to Bob Kierlin, the visionary founder and former CEO of Fastenal, who recently passed away at the age of 85. Known for his frugal leadership style and innovative approach to industrial distribution, Kierlin left a lasting impact on the industry and his community. I always thought he would be a manager that Buffet would like, and I wasn't surprised at one of the annual meetings many moons ago when Buffett mentioned Fastenal. Indeed, Fastenal’s frugal expense management caught my attention when I purchased my first shares in March 2000, which I still happily own. The stock over the last 25 years had risen more than 30-fold from a split-adjusted $2.44 per share to more than $75 per share today. This demonstrates the value of identifying well-managed companies with strong business models for long-term investment success. Bob Kierlin was a top-notch manager whom I greatly admired, and he remains one of my corporate heroes alongside Buffett and Munger:
By CEO standards, Bob Kierlin had modest needs.
The co-founder of Fastenal, an international seller of nuts, bolts and other supplies for manufacturing and construction firms, took a salary of $120,000 a year at its peak in the 1990s, with no bonuses or stock options; that was less than some Fastenal store managers earned. He clipped grocery coupons, and bought some of his suits secondhand, for $60 apiece. On business trips, he stayed in discount motels and often shared a room with a colleague. He paid for his own meals on the road.
Kierlin wasn’t hurting financially: He had shares in the company worth hundreds of millions of dollars from his original stake. And the company’s board was willing to pay him far more. But Kierlin said he didn’t need it.
Kierlin, who died Feb. 10 at the age of 85, didn’t have a personal secretary or even his own parking place outside the drab concrete head office in his hometown of Winona, Minn. Much of the furniture inside that headquarters was used.
Kierlin, who favored short-sleeved white shirts and khakis bought at Kmart, was frugal out of habit and on principle. “It sends a message that we are not wasting anything,” he said. “We do buy good equipment when we need it. But we won’t spend money on things like desks and furniture and shelving for our stores.”
When Kierlin found holes in socks, he threw them out—but kept their intact mates and was delighted if later he could match those widowed socks with others of the same hue.
Though he was generous in donating to educational, fine arts and other causes, he refused to have his name put on buildings. In June 2006, the St. Paul Pioneer Press reported that his shares in Fastenal were then valued at $440 million and that he had distributed about $100 million to charities and nonprofits and to Fastenal employees through gifts of his own stock. His philanthropy continued after that date as the value of his stock soared.
The company, whose current stock market value is about $44 billion, thrived under his leadership, from its founding in 1967 through his retirement from the board in 2014. It has remained highly profitable.
