Tuesday, August 24, 2004

Google ranked last in corporate governance?!

"On a scale of 0 to 100, ISS gave Google a 0.2 when compared with S&P 500 companies. "It would rank dead last," says Pat McGurn, a director with Institutional Shareholder Services"
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/08/24/BUGBU8D46M1.DTL

First, it really should be noted that Google is not in the S&P 500 and that comparisons to it are for illustrative purposes. But that said.

Come on, a rating of .2 on a scale of zero to one-hundred?!?! When I first saw this I figured it was just ISS trying (effectively I might add) to get some attention. However, upon further review, Google does have some policies that are at least questionable. For instance from CNNfn:

These flaws...include a dual-class capital structure that gives effective control to insiders, too few outside directors and a lack of stock ownership guidelines for executives and independent directors. The adviser also found problematic the company's compensation plan that lets Google reprice stock options if the stock price falls, as well as loans to company insiders. (

While a rating of .2 on a scale of zero to a hundred suggests otherwise, not all is bad at Google. For example, its IPO showed the firm was willing to at least try to look out for ordinary investors. Additionally the Boston Globe reports :

ISS noted several practices as positive, including Google's separation of chairman and chief executive, its compensation committee being comprised solely of independent outside directors, and its plan to hold board annual elections. Also, despite going public with several antitakeover measures in place, the company doesn't have a poison pill and allows shareholders to call special meetings.

So all does not sound quite as bad as originally reported. Mmm, maybe the judges messed up the scoring.

Sources:







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