GovernanceMetrics International

GMI Ratings and Rating Reports are designed primarily as a risk measurement tool to complement traditional security analysis and financial modeling. Subscribers include institutional investors, banks, insurance companies and regulatory agencies throughout North America, Europe and the Asia-Pacific region. Within those organizations, GMI services are used by analysts, portfolio managers, compliance officers, proxy officers and other professionals employed in both equity and fixed income research. These investment professionals use GMI research and ratings:

as part of overall investment strategy for fundamental analysts
as a screening tool for quantitative analysts and portfolio managers
to adjust for governance risk in capital asset pricing models
to adjust for governance risk in credit risk models
as a complement to quality of earnings analysis
to prepare for analyst calls or meetings with portfolio companies
to augment proxy voting decisions in contested elections and other high profile votes

GMI ratings and research reports are also used by publicly traded companies and accounting and law firms for benchmarking purposes. In some cases GMI is used to help officers and directors evaluate the governance profile of other companies where they have been invited to join the board. Interest in GMI from corporate issuers and their advisers is due to a growing awareness that corporate governance is more than a legal or compliance issue. When handled well, good corporate governance practices can be a competitive advantage to help companies:

lower borrowing costs
broaden access to capital in primary and secondary offerings
gain an edge in M&A transactions
reduce or moderate increases in D&O premiums
reduce the chance of being targeted for shareholder action
increase the chance of recruiting and retaining directors you want
increase market trust in reported earnings
achieve a higher stock price

GMI Ratings and Market Coverage
GMI Ratings are prepared by GMI at no cost to the company and are based on publicly disclosed information only. Companies are first rated when they are added to a market index already covered by GMI or when GMI adds a new index to our coverage universe. We also continue to cover companies previously rated if they are dropped from an index we track.

GMI research analysts start the rating process by developing a detailed database profile for each company in our system. We review regulatory filings, articles of incorporation, bylaws, environmental, health and safety reports, company websites and other public sources to answer the hundreds of metrics on corporate governance and corporate accountability used to generate GMI ratings. We repeat this process with each quarterly ratings cycle. We also post daily updates on the GMI subscriber site to keep subscribers informed about governance developments at rated companies in between scheduled ratings release and also will add new red flags or re-rate a company in between the scheduled quarterly rating cycle when events so warrant.

GMI's current research universe includes more than 3,500 companies in industrialized markets throughout North America, Europe and the Asia-Pacific region. GMI also offers coverage for 615 companies from 25 emerging markets located in Africa, the Asia-Pacific region, Eastern Europe, the Middle East and Latin America. GMI offers complete coverage of the following major market indices: MSCI World, MSCI EAFE, TSX 60 (Canada), S&P 500 (US), S&P MidCap 400 (US), S&P SmallCap 600 (US), Russell 1000 (US), Dow Jones STOXX 600 (Europe), FTSE Eurofirst 300, BEL 20 (Belgium), CAC 40 (France), DAX (Germany), FTSE ATHEX 20 (Greece), MIB 30 (Italy), AEX (Netherlands), IBEX 35 (Spain), OMX (Sweden), SMI (Switzerland), FTSE 350 (UK), Nikkei 225 (Japan), ASX 100 (Australia), Hang Seng (Hong Kong) and STI (Singapore).

GMI Rating Criteria
For those wishing to understand the basic criteria for GMI ratings, there are three good places to start. Each is free-of-charge.

"GMI Research Categories and Sample Metrics" are available upon request. While the document doesn't itemize every metric in our system, it does provide a great deal of insight into the ratings categories GMI reviews in order to generate company ratings.
GMI's guidelines for classifying board members as independent or non-independent are available on our website for public view. Please click on Director Classifications on the GMI home page.
Each summer, before GMI re-calculates the next set of company ratings, we distribute what we call a "Company Data Report" to each rated company. This multi-page report, distributed electronically, allows companies to review the data collected by GMI analysts that will be used to generate their ratings. If a company disagrees with a particular data item and can show us where the information has been publicly disclosed, we update our database accordingly. There is no charge for the Company Data Report.

GMI has identified a contact person at each rated company to receive the Company Data Report. Our contact is typically the chief governance officer or someone in the office of the general counsel, corporate secretary or investor relations. If you are not sure who your primary company contact is, please send an e-mail to info@gmiratings.com.

GMI Rating Reports
After the data review process has concluded, GMI generates company ratings using a proprietary scoring algorithm. Our analysts then write and publish the final "Rating Report" for each rated company. This is the report seen by GMI's subscribers. It includes the company's ratings and explanatory text discussing its perceived corporate governance strengths and weaknesses. GMI Rating Reports also highlight issues of particular concern, such as stock option dilution, with a red flag. The most recent Rating Reports were published by GMI on June 16, 2008.

Companies are able to receive a courtesy copy of their Rating Report the first time they are rated by GMI. Rating Reports for subsequent ratings are available for a fee of $1,000 per report. Companies may also subscribe to a service that lets them access all Rating Reports and Updates published by GMI on their company over the course of a year for an annual fee of $2,500. Please note that through special arrangements with the National Association of Corporate Directors and the Society of Corporate Secretaries and Governance Professionals, NACD and Society members are entitled to a discounted rate for copies of their Rating Reports or single company subscriptions. Please contact GMI for additional information.

Alternatively, in lieu of the full Rating Report, companies may choose to receive a copy of their "Rating Summary" from GMI once a year. Rating Summaries include the Overall Global Rating for each company but do not include home market ratings, section ratings or explanatory text. Currently available Rating Summaries are based on GMI's September 2007 release. There is no charge for a Rating Summary. Overall Global Ratings are also available over Bloomberg and NASDAQ Online.

Please click here to download list of companies covered by GMI and the date they were first rated.

Corporate Subscription Packages by Market Sector or Industry Group
In addition to regional-based subscriptions, GMI also offers subscription packages based on 18 different market sectors and 38 industry groups for corporate issuers interested in benchmarking against their peers. Sector-specific and industry group subscriptions are priced depending on the number of companies include in the market sector or industry group. Corporate subscription packages include access to the GMI website, all Rating Reports and Updates published by GMI for companies in each sector or industry, a file in Excel, tab or pipe-delimited format containing a complete set of overall ratings and section ratings for each company, plus access to GMI's research bibliography of studies examining the link between corporate governance and performance.

Available sectors include: Automobiles & Parts, Banks, Basic Resources, Chemicals, Construction & Materials, Financial Services, Food & Beverage, Healthcare, Industrial Goods & Services, Insurance, Media, Oil & Gas, Personal & Household Goods, Retail, Technology, Telecommunications, Travel & Leisure and Utilities. Please contact GMI for more information about a market sector subscription or the specific industry groups available within these sectors.