What's the flipside to shareholder-friendly stocks expected to underperform the market? Highflyers that pay little heed to their owners' interests.  Conversely, there are top-flight companies that also treat their shareholders with respect.

Institutional Shareholder Services -- the big name in corporate proxies -- measures how well a company performs in as many as 63 categories, covering four broad areas. Moreover, each company is scored relative to its market index and its industry group. It assigns the stocks a rating that it calls it Corporate Governance Quotient, or CGQ.

Some evidence supports the notion that companies with weaker governance have higher risk, decreased profitability, and lower valuations. We'll be looking at stocks that Motley Fool CAPS investors have marked to outperform the market and also sport above-average CGQ scores, either in their Index group or among industry peers.


CAPS Rating
(Max 5)

Index CGQ Ranking*

Industry CGQ Ranking*

Halliburton (NYSE:HAL)




General Electric (NYSE:GE)




Hecla Mining (NYSE:HL)




Coca-Cola (NYSE:KO)




TheStreet.com (NASDAQ:TSCM)




Source: Yahoo! Finance, Motley Fool CAPS.  *Relative placement when compared to companies in index or industry; higher is better.

Although finding good companies and holding them for the long term is one of the great secrets to investing, there are many factors that an investor should consider and whether or not a company is good and how well it treats shareholders shouldn't be least among them. We should view these rankings as a way to gauge how these businesses stack up against one another relative to their shareholder policies.

Go to the head of the class
Though oil services giants Halliburton, BJ Services (NYSE:BJS), and Schlumberger (NYSE:SLB) have suffered steep declines over the past few months, CAPS member Ficus55 sees the international presence of Halliburton overcoming the current weakness because the country has not yet slaked its thirst for oil.

Misplaced decrease in price due to overall stock crisis. [Haliburton] is a strong international competitor and will continue to be so as the search for oil increases it's urgency.

Despite lowering its annual guidance for the second time this year and suspending its share buyback program, CAPS All-Star member skat5 thinks General Electric has gotten all the bad news out this time though he reserves the right to be wrong: "Perhaps finally all the bad news is out about GE. If another shoe drops on their finance unit, this will have been a very bad pick.

CAPS member dollarbrain looks at these times of financial turmoil and thinks investors will flee to the safety of brand name consumer goods like Coca-Cola.

Coke will benefit from the continued turmoil in the financial sector and the uncertainty that will result from the pending end of the short sale ban. There will be another flight to safety.

Yet even when times also cause investors to flee to hard money assets, that doesn't necessarily translate into support for the companies that mine them. Hecla Mining has fallen down like many other commodity producers since the summer but CAPS member stkgeek thinks that despite its shaky performance it has the wherewithal to grow over the next year.

That would seem to jibe with enclaved's position earlier this summer that it was Hecla's South American operations that caused it to wobble but it has since steadied itself.

Silver, Gold, and other mineral miner. Got drove down by problems in Venezuala. Lucked up with a Russian buy out of Brazilian operations, and now cruising.

A Foolish quotient
Many factors go into whether a stock is a buy or sell, but do corporate governance policies enter into your equation? It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made all from a stock's CAPS page.

Coca-Cola is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.