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.
Related or Semi-related Video
Finance: What are Bond Ratings, and What...41 Views
- a la shmoop. what our bond ratings and what do they mean?
all right well pressed, we'd say Sean Connery,
but Daniel Craig has been pretty amazing and exceeded all expectations right? okay [Actors Connery and Craig shown]
okay so we love double-oh-seven but well that has nothing to do with this topic.
here we're referring to how risky or safe a given bond is. if you just landed
on earth remember that a bond is a promise to pay back money after having
rented it in the form of interest payments for a given period of time. and
some bonds are well ,they're risky. famously the bonds issued by the
territory of Puerto Rico went crashing to the ground when the country [Puerto Rican city pictured waving a white flag]
essentially declared bankruptcy in 2017. well corporate bonds die as well as
government bonds. when the internet and wireless technology radically changed
the economics of the radio and newspaper industries well many of those
corporations saw their bonds kissed the perimeters of bankruptcy. so bonds can be
risky despite the vast 99% plus of them who fully pay back their interest and
principal on schedule. but some don't though or have to delay payments or have
other issues and to account for this risk and to communicate that risk to [two workers from Chase bank stand hands on hips shaking heads]
would-be investors, there are rating services who assess the borrower's
ability and likelihood to pay back the money they have promised to the you know
pay back. well the top ratings are shown here,
those triple-a bonds are a really good ones. if a bond flunks completely well it
gets something in the C range. that we have California grade inflation here and [bond rating chart pictured]
you know talk about grading on a curve. and that is how you get your bonds
shaken and not stirred. [man holds martini glass]
Up Next
What are credit ratings and how are they interpreted? Credit ratings describe a borrower’s likelihood to pay back their debts; it’s a look at h...
What are the differences in S&P’s and Moody’s ratings? Both S&P and Moody’s give ratings that help investors determine if they are making sma...