Performance ESG (Oct Update): Boardroom Alpha TOP 50 up +9.7% / BOTTOM 50 down -18.5%
November 6, 2020

Boardroom Alpha’s Performance ESG Ratings continue to demonstrate that better teams outperform and bad teams underperform.

In an analysis of the highest and lowest Boardroom Alpha Rated boards of directors (for large-cap US corporates) companies with the highest average board ratings beat the market, while companies with the lowest average board ratings significantly underperform the market.

Boardroom Alpha’s ratings are derived by using a bottoms-up approach – we assess each director based on their full track record and aggregate the individual ratings to arrive at a company-level board rating.

Investment managers should be keenly aware of the track record of the management teams that they are investing in, Boardroom alpha provides the necessary quantitative assessment of the people who are in charge.

Highlights from the Bottom

CompanyBoardTickerYTD Return
State Street CorpC-STT-22.5%
TextronC-TXT-15.3%
Franklin Resources, Inc.C-BEN-21.3%
Molson Coors BeverageDTAP-29.5%
Selected companies from Boardroom Alpha’s BOTTOM 50 Portfolio. YTD thru 11/1

The State Street board looks in need of a material refresh with a current average Director Rating of C- and directors that skew older, including no director under the age of 55.

Textron, also with an average director rating of C-, added A+ rated Director Lionel L Nowell III this year to help out their average, yet 5 directors still have tenures > 10 years, including 73-year old Lead Director Paul E Gagne (D) who has served for over 25 years.

Molson Coors, despite a decent Q3, still sports a board rating of a D with little gender diversity. Just two of fourteen (~14%) directors are women and the second, Nessa O’Sullivan, was only recently added to the board at this year’s annual meeting in May 2020. Four members of the Molson and Coors families, respectively, also serve on the board.

Highlights from the Top

CompanyBoardTickerYTD Return
Arthur J. Gallagher & Co.A-AJG13.3%
Packaging Corp of AmericaB+PKG7.9%
CoStar GroupB+CSGP42.2%
O’Reilly AutomotiveAORLY0.7%
Selected companies from Boardroom Alpha’s TOP 50 Portfolio YTD thru 11/1

CoStar Group, one of the big winners of the year, sports an average director rating of B+. The board has industry heavy hitters such as Hilton CEO Christopher Nassetta (A-), in addition they have added an additional female this year in Louise Sams (B+), to improve their gender diversity to 25%.

Arthur J. Gallagher & Co., the insurance broker, has vastly outperformed the broader Insurance sector this year, and has a board with an average director rating of A-. Yet, ESG investors take note as just one of the board’s ten members is female. The board does sport a nice mixture of fresh faces and company veterans with solid tenure diversity.


Disclosures

This material is provided for informational purposes only. It is not an offer or solicitation to buy or sell, or a promotion or recommendation of any financial product, security or trading strategy. Although certain information has been obtained from sources believed to be reliable, Boardroom Alpha does not guarantee its accuracy, completeness or fairness. Boardroom Alpha has relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources. This material is provided “as is” and the user of this material assumes the entire risk of any use it may make or permit to be made of this material. Historical data and analysis should not be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. Views and opinions expressed are for informational purposes only and do not constitute a recommendation by Boardroom Alpha to buy, sell, or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change, they should not be construed as investment advice. None of this material is intended to constitute any financial or investment advice and may not be relied on as such. Boardroom Alpha shall not be (i) liable (whether in negligence or otherwise) to any person for any error in the material or (ii) under any obligation to advise any person of any error therein. Without limiting any of the foregoing, in no event shall Boardroom Alpha have any liability for any direct, indirect, special, incidental, punitive, consequential (including without limitation lost profits), or any other damages in connection with the material.

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