Top Honours for AB InBev & Novo Nordisk

Morningstar's new stewardship rating singles out companies where management is acting in the best interests of shareholders

Elizabeth Collins, CFA 22 November, 2012 | 11:25AM

In May 2012, Morningstar's equity research department launched a revised stewardship rating methodology, which identifies companies that make capital allocation decisions in the best interests of shareholders. To date, analysts have assigned ratings to nearly 1,000 companies.

The new methodology is globally applicable, allowing for apples-to-apples comparisons among companies even if corporate governance standards vary by location. Our methodology places a heavy emphasis on management's stewardship of capital and only incorporates corporate governance practices to the extent that they have a demonstrated impact on shareholder value creation or destruction.

In Europe, government ownership or employee representation on the board are familiar or even common. Morningstar's stewardship rating methodology doesn't automatically penalise companies where minority shareholders' interests are subordinate to the government or employees. However, when these corporate governance structures have led to behaviours that result in the significant creation or destruction of shareholder value, then our ratings reflect such stewardship.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Anheuser-Busch InBev SA/NV47.46 EUR-4.89
BP PLC291.75 GBX-4.20
Credit Agricole SA11.62 EUR-1.57
Eli Lilly and Co204.89 USD0.52
Exxon Mobil Corp54.37 USD-2.49
Novo Nordisk A/S B437.95 DKK-1.13

About Author

Elizabeth Collins, CFA  is an associate director of equity research with Morningstar.

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