There was little change at the top but some prominent names plunging downward in analyst Michael Webber’s latest version of the Wells Fargo corporate governance scorecard for shipowners.
Eagle Bulk retained its crown as the top-rated governance performer, and indeed 13 of the top 14 names remained the same if not quite in the same order.
The top four of Eagle, International Seaways, Overseas Shipholding Group and Triton International remains intact. Ardmore Shipping moves up two spots to claim fifth, pushing out Matson.
There was also strong consistency at the bottom of the list — companies judged to have the weakest corporate governance.
Perennial cellar dweller DryShips, led by Greek shipowner George Economou, retains its last-place spot, followed by (from worst) Danaos Corp, Safe Bulkers, StealthGas and Tsakos Energy Navigation.
The same five companies brought up the rear in Webber’s last report.
Once again, Webber drills home the point that investors have spoken in how they treat companies with strong governance — and not.
Those in the top quartile of the 56-owner ranking outperformed the peer group by 16% on a one-year basis and 53% on a five-year basis.
The bottom quartile underperformed peers by 19% and 31%, respectively.
Beyond the consistency at the top and bottom of the tables, the biggest story was precipitous drops by some prominent names, generally related to how they carried out merger-and-aquisition activity.
The biggest fall came for Star Bulk, the Greek owner led by Petros Pappas. It dropped from 16th all the way to 41st — the plunge of 25 places the largest for any company.
Webber explains in his report that the downgrade stems from how Star carried out successive acquisitions of fellow bulker owners Songa Bulk and Augustea.
In both cases, Star retained technical management contracts with related-party entities that had served the acquired outfits. In addition, Star appointed Songa principal Arne Blystad to its board.
It should be noted that Star otherwise has been praised for the consolidation spree, which brought significant scale to the largest public bulker owner.
Avance Gas and Global Ship Lease also took big tumbles. Avance fell from 15th to 32nd, while GSL fell from 28th to 46th.
Avance was docked for its growing relationship with largest shareholder John Fredriksen's Hemen Holdings and integration with his Seatankers.
GSL was cited for paying sale-and-purchase fees to Conchart, a company controlled by GSL executive chairman George Giouroukos.
Another tumble came for Herbjorn Hansson’s Nordic American Tankers, which dropped from 24th to 35th on the basis of pre-payments by the company for use of a jet owned by Hansson, its chairman.
Finally, although the drops were small, Webber docked Scorpio Tankers and Scorpio Bulkers for a related-party deal that saw the bulker company invest $100m in its tanker sister last October.
Scorpio Tankers dropped three rungs to 49th, while Scorpio Bulkers fell a single spot to 45th.
