A shareholder rights group on Tuesday ranked Price Co., the San Diego-based discount retailer, as the nation’s best publicly held company, measured by its accountability to shareholders and stock performance.
Price was followed closely by Circle K, a Phoenix-based convenience store chain, and Aon, a Chicago-based insurance firm, according to rankings of 1,000 major U.S. corporations by the United Shareholders Assn., a group founded in 1986 by Texas oilman and corporate raider T. Boone Pickens Jr.
At the other end of the spectrum, the three companies rated the worst for shareholders were Allegheny International, Maxus Energy and USG.
“For shareholders, size is meaningless and results are everything,” Pickens said in a statement, criticizing such lists as the Fortune 500 and Business Week 1000, which rank corporations based on their size. None of those rankings, he said, say “anything about how well the companies perform their primary mission, which is to create value for shareholders.”
By contrast, United Shareholders said, its first “Corporate 1000 Ratings,” to be issued annually, were based on three criteria: companies’ adherence to shareholder rights, management’s ownership stake of stock and economic performance.
Shareholder rights and economic performance each accounted for 40% of the score, and management’s ownership stake accounted for the remaining 20%. Companies were assigned points--either positive or negative--for good or bad behavior.
For example, in shareholder rights, companies that adopt measures prohibiting “greenmail” (buying back stock from a hostile suitor at a price higher than paid to other shareholders to fend off the bid) earned 10 points. On the other hand, companies that adopt an unequal voting rights plan that reduces voting rights for certain shareholders were stripped of eight points.
Price, a leading operator of cash-and-carry membership wholesale clubs, scored high on corporate performance, as it has reported earnings gains in each year since 1980 and its stock has multiplied about 30-fold over its level in 1980. The firm also did well on shareholder rights and high ownership of its stock by top management.
United Shareholders also noted that among the top 20 companies:
* Long-term returns, including stock price appreciation and dividends, average more than 30%.
* Chief executives of all own stock worth several times their annual compensation.
* Sixteen of the 20 are incorporated in states that do not have what the group considers to be anti-shareholder laws.
* None use unequal voting rights schemes.
* Only two have poison pills (plans that make a company’s stock less attractive to an acquirer) and only one has golden parachutes (employment contracts that grant generous severance payments to top executives should they be forced to leave in a takeover or other event).
However, among the 20 worst firms, 12 have poison pills, three have paid greenmail, all are incorporated in states with anti-shareholder statutes, nine paid no dividends in 1988 and long-term returns average less than 3% per year, United Shareholders said.
United Shareholders of America--founded by T. Boone Pickens Jr., above--rates companies based on three criteria: adherence to shareholder rights, market-based economic performance and management’s ownership stake in the company. Companies are ranked in each category from plus 20 to minus 20; the final ranking is the sum of the three categories.
The chief executives of all own stock worth several times their annual compensation. Sixteen have boards in which all directors have ownership stakes in excess of their annual compensation.
Company Rating Price Co. 74 Circle K 73 Aon Corp. 72 Southwest Airlines 70 TCA Cable TV 68 The Gap 68 Autodesk 68 Systematics 66 Applied Biosystems 64 Russell 60 EMC Corp. 60 Berkshire Hathaway 60 20th Century Industries 59 3Com 59 Ohio Mattress 59 Intel 59 GAF Corp. 59 Walgreen 58 Wal-Mart Stores 58 Tyco Laboratories 57
Nineteen are traded on the New York Stock Exchange. Fourteen are in the Fortune 500. Nine paid no dividends in 1988. All are incorporated in states with anti-shareholder statutes.
Company Rating Western Union -16 USX -16 Texas Air -16 Navistar Intl. -16 Caterpillar -16 Bowater -16 Anadarko Petroleum -16 Tektronix -17 Pittston -17 Goodyear Tire & Rubber -17 Asarco -17 National Intergroup -19 Robertson -20 Home Group -20 Manville -21 Hercules -21 LTV -25 USG Corp. -26 Maxus Energy -30 Allegheny Intl. -32
The following chief executives hold common stock worth more than their annual compensation (base salary plus bonuses).
Company Chief Executive Microsoft William Gates III Berkshire Hath. Warren Buffet Petrie Shoes Milton Petrie The Limited Leslie Wexner Amerada Hess Leon Hess Penn Central Carl Lindner Agency Rent-a-Car Sam Frankino TCA Cable TV Robert Rogers Flightsafety Intl. Albert Ueltschi Lands End Gary Comer Turner Broadcasting Ted Turner Mitchell Energy George Mitchell