[Congressional Record Volume 154, Number 158 (Tuesday, September 30, 2008)]
[Extensions of Remarks]
[Pages E2173-E2174]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       RECOGNIZING MR. DAVID YOST

                                 ______
                                 

                            HON. JIM GERLACH

                            of pennsylvania

                    in the house of representatives

                       Monday, September 29, 2008

  Mr. GERLACH. Madam Speaker, I rise today to honor a southeastern 
Pennsylvania business leader whose talent and fiscal discipline should 
serve as a shining example for executives in these trying economic 
times.
   David Yost is Chief Executive Officer of AmerisourceBergen, a drug 
distribution company located in Valley Forge, Pennsylvania. Recently, 
the magazine Business Week highlighted how Mr. Yost's no-frills 
management style has helped the company thrive.
   At a time when the lavish perks of Wall Street executives grab all 
the headlines, the Business Week article noted that Mr. Yost answers 
his own phone at the office, flies economy class and limits his power 
lunches to a turkey hoagie with provolone cheese from a local deli. In 
addition, the article stated that Mr. Yost's salary is a fraction of 
his peers in the industry, while the company's profit margins exceed 
those of its competitors.
   Although Mr. Yost is diligent about holding down expenses, he does 
not shy away from investing in the company. That is evident by the $100 
million dedicated over the next three to five years to improve customer 
service technology and the $400 million used for enhancements to 
company distribution centers, the article stated.
   Madam Speaker, I ask my colleagues to join me in saluting David Yost 
for his exemplary leadership and for putting the interests of his 
company, his customers and his employees first. We also offer Mr. Yost 
and AmerisourceBergen best wishes and continued success in the future.

                            [Business Week]

                AmerisourceBergen's Scrimp-and-Save Dave

                           (By Aili McConnon)

        R. David Yost is acutely aware of tougher times ahead for 
     his customers. Consumers are cutting back on prescription 
     drugs to save money and retailers are struggling with less 
     demand. But the AmerisourceBergen chief isn't worried. The 
     balance sheet of the drug distributor, which acts as a 
     middleman between drugmakers and retailers, is strong. 
     Besides, Yost has been tightening his belt for years.
        Even in an industry known for its razor-thin margins, Yost 
     is remarkably cheap. He answers his own phone, flies economy 
     class, and rarely strays beyond a shortie turkey hoagie with 
     provolone from the local deli near his sterile industrial 
     park headquarters in Valley Forge, Pa. Yost, 61, admits that 
     his $66.1 billion company could absorb the cost of getting 
     him extra secretarial help and a more comfortable seat on 
     planes, but that's not the point. ``The leader is very 
     important in controlling business costs,'' says Yost, whose 
     headquarters lobby is decorated with plastic plants to save 
     on watering.
        While Yost's zeal to cut costs may strike some as absurd, 
     his efforts have helped Amerisource thrive. And he thinks the 
     current credit crisis won't swing the company off course. Not 
     only has Amerisource held its own against rivals McKesson 
     (MCK) and Cardinal Health (CAH), but leaner operations have 
     helped it grow revenues 8% this year while the broader 
     industry is growing half as fast. In the last quarter, 
     Amerisource profits

[[Page E2174]]

     increased by 30%, excluding one-time sales; McKesson's and 
     Cardinal's were up 8% and 13%, respectively. Yost's total 
     paycheck last year (including stock options) was $4.8 
     million, less than half that of Cardinal's CEO and barely a 
     sixth of McKesson's chief. ``He is not flamboyant or 
     flashy,'' says Banc of America Securities analyst Robert 
     Willoughby, of Yost's inclination to be modest. Adds John W. 
     Ransom of Raymond James & Associates: ``At 1% margins, you 
     have to be.''
        Now he's under even more pressure to watch the bottom line 
     as his customers struggle to stay competitive. Amerisource 
     relies heavily on smaller, independent chains that are fast 
     being gobbled by big players, who may have contracts with the 
     distributor's rivals. But Yost predicts volume will pick up 
     over the long term. ``The older we get, the more drugs we 
     take,'' says Yost, settling comfortably into a 1970s-era 
     plaid chair (the weathered green leather chair at his desk, 
     which he inherited from the previous CEO when he took over in 
     1997, looks like a yard sale find).
        George Barrett, the CEO of Cardinal's drug distribution 
     arm, says that what matters in a leader isn't frugality but 
     foresight. ``I don't want our people to see me as cheap but 
     instead very efficient and cognizant of the environment in 
     which we compete,'' says Barrett. But Yost insists he can be 
     all those things. While he pays competitive salaries to 
     attract talent, he allows employees to fly business class 
     only if they pay for an upgrade themselves. And they must 
     book 30 days in advance to get the best price. Yost is also 
     investing more than $100 million over the next three to five 
     years to improve customer service technology, and he paid 
     $400 million to spruce up company distribution centers and 
     consolidate operations.


                               THE PAYOFF

        Of course, new technology also brings new ways to save 
     money. Plant employees now wear wrist bands connected to a 
     thimble device on their finger that uses an infrared laser 
     that reads the bar code of what they unload or pick up. 
     Workers who move more product than average receive bonuses 
     for the time they've saved the company.
        If that sounds Orwellian to some, Yost doesn't much care. 
     While the Amerisource chief may not be eager to spend a buck, 
     he certainly knows the value a dollar holds for others. 
     Amerisource has returned more than a third of its free cash 
     flow to shareholders for the last two years and used the rest 
     for core acquisitions. ``The landscape is littered with 
     companies that think they can do a lot of businesses well,'' 
     says Yost, adding that he no longer trots out the cliche 
     ``stick to our knitting'' because he fears it makes him sound 
     stodgy. ``We're focused on knitting faster, better, and more 
     creatively than anyone else.''

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