TDS is named one of Forbe\'s Most Trustworthy Companies...

1. MARCH 20, 2012 | WWW.FORBES.COM
America’s Most Trustworthy Companies
By Jacquelyn Smith, Forbes Staff
O ver the last few years, corporate
scandals, bailouts, and bankrupt-
cies have greatly damaged
investors’ trust in some of the country’s
solid corporate governance and manage-
ment. They do not play games with rev-
enue and expense recognition, or with
asset valuation.
Securities and Exchange Commission
enforcement actions, financial reporting
delays, bankruptcy filings, and poor stock
price performance.
largest public companies. However, even GMI’s evaluation penalizes companies As in previous years, GMI has sorted its
today, many corporations are models of for unusual or excessive executive com- 100 Most Trustworthy Companies into
openness and integrity. pensation, high levels of management three groupings, according to market cap-
We set out to identify the most transpar- turnover, substantial insider trading rela- italization. In this year’s crop, three small-
ent and trustworthy businesses that trade tive to their corporate peers, or high levels cap companies received the highest cur-
on American exchanges. In the past, of short-term executive compensation, rent AGR score, 100. The two mid-caps to
Forbes turned to Audit Integrity, an inde- which encourages management to focus come closest were Entegris, a major
pendent financial analytics company in on short-term results. Good housekeeping provider of semiconductor fabrication
Los Angeles. Audit Integrity recently practices leave companies better prepared materials, and Mueller Industries, a man-
merged with the Corporate Library and to handle financial turmoil, which is cru- ufacturer of copper, brass, plastic, and alu-
GovernanceMetrics International to form cial during tough economic times. The minum products. Each scored 99. The
GMIRATINGS (GMI). absence of negative events counts as much highest scoring large-cap company was
“What these companies have in com- as the existence of positive events. the insurance firm Cincinnati Financial,
mon is what they don’t have: problems To create the list, GMI examines more with a current AGR score of 97.
that indicate elevated risk,” says GMI than 8,000 companies traded on U.S. To qualify for the roster, the 100 com-
Chairman James A. Kaplan. “Those prob- exchanges. Every three months it assigns panies all had to have market caps of $250
lems can range from high executive com- each company an accounting and gover- million or more at the time GMI prepared
pensation or incentives that are not nance risk score, or AGR, based on pro- the list (March 13, 2012). Over the last
aligned with shareholder interests to prietary modeling designed to identify four quarters the companies must have
inconsistent application of accounting practices that historically have had a high maintained AGR ratings of “conservative”
principles, or the occurrence of negative correlation with increasing shareholder or “average,” and had no amended filings
events.” risk. with the Securities and Exchange
GMI’s quantitative and qualitative GMI rates the 15% of companies in its Commission, no SEC enforcement
analysis looks beyond the raw data on universe with the highest AGR scores as actions, and no material restatements.
companies’ income statements and bal- “conservative” and the 10% of companies They also had to rank high in GMI’s
ance sheets to assess the true quality of with the lowest scores as “very aggres- Equity Risk Ranking, which indicates a
corporate accounting and management sive.” Companies in between those positive forecast for equity returns, and
practices. extremes are rated either “average” or have minimal likelihood of financial dis-
For the fifth year, GMI has provided “aggressive.” “Companies ranked in the tress as measured by GMI’s Bankruptcy
Forbes with a list of companies that are at bottom 10% are at the greatest risk of liti- Risk model.
the other end of the spectrum from the gation, restatements, and other negative “Many studies have shown that well-
beleaguered firms that make so many of events,” says Kaplan. governed companies with transparent
today’s headlines. GMI finds that its 100 GMI claims that it has established a accounting have a higher price premium
Most Trustworthy Companies have con- direct correlation between its AGR assess- than their competitors, reduced cost of
sistently demonstrated transparent and ments and the likelihood of negative capital, and a higher long-term return for
conservative accounting practices and events such as class-action litigation, shareholders,” Kaplan says.

2. America’s Most Trustworthy Companies
Telephone & Data Systems
Market Value: $2,688 million
Current AGR Score: 98
Average AGR Score (last four quarters): 99
www.teldta.com
Mid-Cap
Current AGR score Average AGR Score Market value
Company* (as of 3/13/12) (last four quarters) ($M)
Telephone & Data Systems 98 99 2,688
Mueller Industries 99 97 1,801
Northwest Bancshares 98 95 1,230
International Bancshares 96 94 1,350
Eastgroup Properties 97 93 1,393
BP Prudhoe Bay Royalty Trust 93 92 2,651
Glacier Bancorp 94 92 1,071
Patterson Cos 93 92 3,490
Owens & Minor 94 91 1,919
PriceSmart 98 91 2,083
* This is only a portion of the Forbes Most Trustworthy Companies (Mid-Caps) ranked according to the Average AGR Score (last four quarters).
Source: GMI
Highlighting added for emphasis.
Posted from www.forbes.com with permission from Forbes.com LLC Copyright 2012, Forbes.com LLC. All rights reserved.
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