Scrimp-and-Save Dave

AmerisourceBergen's Scrimp-and-Save Dave

He may be cheap, but CEO David Yost's penny-pinching ways have helped the drug distributor profit in a tight market

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.

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.

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."