This article features an interview with Michael Webber, who has been tracking corporate governance in ocean shipping firms since 2016. He produces an annual corporate governance scorecard for shipping, now at his own firm, Michael Webber Research and Advisory.
One significant issue in shipping is the constantly changing mosaic of companies. Firms are constantly merging in companies and creating new spinoff firms, some containing only a single ship. It’s a chore to keep track of it all, let alone try to rate how well the firms are looking after shareholders. The ratings Michael provides are simply to inform readers of the practices the firms engage in. This helps investors and traders to understand whether the firm is practicing good corporate governance or engaging in bad practices.
Webber claims that companies that score low on his rating have trouble raising capital using equity. He thinks investors are becoming more selective. It’s not only affecting stocks on the market; IPOS are failing due to governance issues as well.
There are a lot of related party transactions in shipping. Some benefit public investors and some don’t. Because no one was looking very hard in the past, it can be complicated for an older firm, say from the 2000’s, to unwind old structures that were not examples of good governance. Some firms have been successful doing this, but Webber says shareholders are at an informational disadvantage when these transactions are proposed. His rankings try to shed light on the corporate governance of the actors, for the benefit of the shareholders.
Webber thinks governance is improving overall, and shipping has improved its image on Wall Street. His ratings help public shipping companies find opportunities to conform to best practices in governance, and that improves the image and reality.
The scorecard rankings for 2023 are shown below.
The stock symbols of each firm are given. Webber has marked the firms that make no carbon disclosures.
Greg Miller· Thursday, July 27, 2023
Corporate governance in shipping: Who’s been naughty or nice?
Update: The University of Plymouth and the National and Kapodistrian University of Greece have announced a new ESG index to be revealed September 11th. It will be interesting to compare their work against Michael Webber’s.
Sam Chambers July 31, 2023
Supply Chain and Logistics 