S&P Releases Management and Governance Scores for Non-Financial Rated Companies

On May 13, 2013, Standard & Poor’s announced that it has completed its initial scoring of their evaluation of “management and governance” criteria for the non-financial companies it rates. In 2012, S&P formalized its criteria that it uses to evaluate an entity’s overall management and governance effectiveness, which consists of 15 factors related to the management and governance of the entity it rates.

Management and governance encompasses the range of oversight and direction provided by the enterprise’s owners, board of directors, executives and functional management with a particular emphasis on their strategic competence, operational effectiveness, and ability to manage risks. This focus is intended to provide S&P an assessment of the enterprise’s overall business risk profile under the presumption that the ability to manage important strategic and operating risks also signals its ability to positively influence its operational success and fulfill its credit obligations.

The Management and Governance criteria for nonfinancial companies consists of eight management subfactors and seven governance subfactors. Depending on how an entity scores along these subfactor dimensions, S&P issues one of four scores: strong, satisfactory, fair, and weak.

As of May 2013, S&P has completed its evaluation of management and governance factors for 2,190 publicly and privately rated North American companies. The overall evaluation scores for these companies is summarized below:

Number (Percentage)Designated As:
125 (6%)Strong
581 (26%)Satisfactory
1,420 (65%)Fair
64 (3%)Weak

In its May 13, 2013 press release, S&P disclosed the names of those companies that received a “Strong” or “Weak” designation. See the list in the May 13, 2013 press release.

Review the Management and Criteria Credit Factors