Ignore management at your own risk.

Sure, evaluating a management team isn't as easy as looking up a stock's price-to-earnings ratio on Yahoo! Finance or calculating its year-over-year revenue growth, but management can often be the make-or-break factor in an investment. Just ask investors in Apple (NASDAQ:AAPL), Berkshire Hathaway (NYSE:BRK-A), or Enron.

But how do you figure out whether management is worth their weight? To get some thoughts on this, I asked the investor team at the Motley Fool Hidden Gems newsletter:

What's your first stop when you're evaluating a company's management team?

Stan Huber, senior analyst
The SEC filings are a good place to start when evaluating management. I also like to listen to the conference call webcasts (not just read the transcript). How management responds to questions is a good "tell" on the transparency of their exposure. And of course if you have the opportunity, nothing beats meeting a management team in person at an investor conference or at company headquarters.

I like to keep up with all of this over time to see whether management walks the talk, or just likes to talk.

Jeremy Myers, analyst
My first stop when checking up on a management team is to look at the team's experience. Specifically, I want to know how long they've been with the company or in the industry and what they've been doing. My ideal is to find managers that have "grown up" in an industry.

Managers that have jumped across industries can often be as attractive as a big scoop of salt in your morning cup of coffee. An example that comes to mind is Bob Nardelli, the former Home Depot CEO who was hired from General Electric (NYSE:GE). Though he's a capable guy, it became apparent pretty quickly that he didn't "get" retail, and Home Depot's stock suffered under his tenure.  

Mike Olsen, senior analyst
I go directly to the proxy statement to read up on exactly how executives and employees are compensated. While I'm not too concerned with the absolute level of compensation, I do want comp to balance the interests of all stakeholders. It's important that the company recognize the behaviors that compensation incents and how that impacts everyone involved -- be it shareholders, employees, or customers. Sustainable enterprises have incentive levers that balance all of these interests.

Seth Jayson, Motley Fool Hidden Gems co-advisor
I head straight to the proxy statement and follow that up with a lot of Web searches. The smaller the company, the more you need to dig.

One of the things I'm always on the lookout for is management teams that are dyed-in-the-wool scammers. The proxy is a great place to find the past management and board affiliations of the C-suite and the current board. The first yellow flag I look for is a lot of short-term stints, especially for CEOs and CFOs. Next, especially with smaller, newer companies, I make note of every past and current affiliation I can find. It's amazing what people will bury in there -- often proudly mentioning past experience at companies that imploded.

By using what you find in the proxies and searching the Web -- and don't just use Google; Yahoo! and other searches often find obscure references that big G misses -- and regulatory websites, you can begin to piece together a history of management. I like to use officer names in searches together with words like "scam" to see what comes up.

Now that we have a sense of how to dig up the dirt on management, what companies come to mind when you think about exceptional management?

Stan Huber
One of my favorite teams is at Sun Hydraulics, a small-cap maker of screw-in valves and manifolds for the hydraulic-powered equipment industry. Not only are they conservative and transparent about the current business environment, they have managed to transform the entire company into the stuff of Harvard Business School case studies.

Many companies talk about empowering employees, but Sun has actually accomplished it. It starts with the approach of allowing customers to specify delivery dates. The staff then organizes the work flow to meet customer desires. This provides Sun with a significant competitive advantage.

Mike Olsen
Two companies that do a great job in my eyes are Diamond Hill Investment Management and Markel (NYSE:MKL). Another that does a great job is Hidden Gems pick Chipotle Mexican Grill (NYSE:CMG). Read an annual report, proxy, or listen to a conference call from any one of these companies and what you'll see is straight talk and an emphasis on doing right.

Jeremy Myers
A management team that I've grown to respect is Copart's (NASDAQ:CPRT) dynamic duo of CEO Willis Johnson and COO Jay Adair. Johnson is the founder of the company and has spent the last three decades revolutionizing the auto salvage industry. He has an established track record of managing the company for long-term investors, rather than trying to please Wall Street.

Johnson has been known to treat his employees exceptionally well with the expectation that happy employees result in happy customers. Adair runs the day-to-day operations and is being groomed to take over the top spot when Johnson retires. He's also Johnson's son-in-law, which gives me confidence that he'll keep Copart's employee-centric culture intact.  

Seth Jayson
As far as good management, we've got plenty in Hidden Gems. Fossil's CEO, Kosta Kartsotis, is one that jumps out at me in particular. Unlike the fake $1 that Steve Jobs is famous for, Kartsotis gets paid nothing. He honest to goodness gets zero, because his equity stake is already large and he works to add value to that.

I'm also currently smitten with the CEO founder of my latest pick -- which I cannot name here since the issue just came out this week. Suffice it to say that anyone who invokes Bigfoot in a conference call is OK by me.

Want to know what Seth's latest pick is? You can check it out, along with the rest of the Motley Fool Hidden Gems portfolio by taking a free 30-day trial of Hidden Gems.

Chipotle Mexican Grill and Copart are Motley Fool Rule Breakers selections. Apple, Copart, and Berkshire Hathaway are Motley Fool Stock Advisor recommendations. Home Depot, Markel, Sears Holdings, and Berkshire Hathaway are Motley Fool Inside Value picks. Fossil, Chipotle, and Sun Hydraulics are Motley Fool Hidden Gems picks. The Fool owns shares of Chipotle Mexican Grill, Markel, and Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days

 Fool contributor Matt Koppenheffer owns shares of Berkshire Hathaway, but does not own shares of any of the other companies mentioned. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants ...