Institutional Shareholder Services has rated each company in the Russell 3000 for corporate governance. ISS calculated the ratings based on seven core categories: board structure and composition; charter and bylaw provisions; laws of the state of incorporation; executive and director compensation; qualitative factors, including financial performance; director and officer stock ownership; and director education. The companies are rated on a scale of zero to 100, with the highest score being the best.
ISS derives the data primarily from public disclosure documents. Companies were scored individually and were ranked relative to their peer groups.
ISS officials are in discussions with several money managers about charging them to use the ratings for their investment research and strategy, said Patrick McGurn, vice president and director-corporate programs. He declined to name the managers and said ISS won’t make the complete list public, nor has ISS decided on a fee. For now, ISS plans to release the ratings in conjunction with each company’s annual meeting and the ISS analysis on the company’s proxy proposals. Mr. McGurn expects the ratings of about 100 companies to be released in the next two months.
