Stewardship Grade

We thought we were done with the whole letter grade thing once we graduated from college, but apparently, we were wrong. Because...here we are, stuck in a meeting with the rest of Carnie-copia, Inc.’s executive team on a Monday morning, listening to our CEO lecture us on how getting a “C” in a high school class might have been acceptable, but it ain't acceptable here at the world’s finest unique event planning company.

So how did we end up getting a “C” grade when we weren’t even taking a class? Easy: Morningstar gave it to us.

Morningstar, a big-name investment research and analysis company, grades various stocks and mutual funds according to their stewardship, or how good they are at taking care of their shareholders. This grade is called a “stewardship grade,” and it ranges from “A” to “F.” Just like in school. But, unlike school, there are no curves on this grading scale. And there are no pluses or minuses, either. What you get is what you get, and that’s all there is to it.

There are five factors that go into the grade: board quality, corporate culture, fees, manager incentives, and regulatory issues. Companies with an “A” grade have excellent shareholder communication and transparency, and they consistently act in the best interest of their shareholders, regardless of what’s going on internally. Companies with an “F” grade do, um...the opposite. So while we should be glad that Carnie-copia didn’t score an “F” or a “D,” we should probably also be looking for ways we can improve our management practices to hopefully earn a better grade next time.