NZX Governance Explorer
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NZXplorer Governance Risk Score (GRS) Methodology

A transparent, data-driven approach to assessing corporate governance quality

Overview

The NZXplorer Governance Risk Score (GRS) is a proprietary metric that assesses the corporate governance quality of NZX-listed companies on a scale of 0-100.

0-40
Poor Governance
41-60
Below Average
61-80
Good Governance
81-100
Excellent

Design Principles:

  • Objective - Based entirely on quantifiable data
  • Transparent - Clear methodology that can be explained and defended
  • Defensible - Uses established governance best practices (NZSA, NZX Code)
  • Actionable - Provides clear signals for investors
  • Scalable - Calculated automatically for all NZX issuers

Six Scoring Components

The GRS is calculated from 6 weighted components, each measuring a different aspect of governance quality:

1. Shareholder Support

30%

Average shareholder support for director elections at the most recent AGM.

Measures: Do shareholders trust the board? High support indicates confidence in board quality.

2. Board Independence

20%

Percentage of independent directors, benchmarked against NZSA's 50% recommendation.

Measures: Is the board free from conflicts? Independence reduces risk of management capture.

3. Board Diversity

15%

Gender diversity on the board, benchmarked against a 30% female director target.

Measures: Does the board have diverse perspectives? Diversity improves decision-making.

4. Director Tenure

10%

Average director tenure, with penalty for excessive tenure (>9 years per NZSA).

Measures: Is there board refreshment? Long tenure can indicate stale thinking or entrenchment.

5. Resolution Outcomes

15%

Number of failed resolutions at recent AGMs (excludes director elections).

Measures: Are there governance controversies? Failed resolutions signal shareholder dissatisfaction.

6. Insider Trading Sentiment

10%

Net insider buying/selling in the last 12 months (SHINTR disclosures).

Measures: Do insiders believe in the company? Net buying indicates confidence.

How Scores Are Calculated

Each component is scored individually on a 0-100 scale using predefined scoring bands. The overall GRS is then calculated as a weighted average:

GRS = (Shareholder Support × 0.30) +
(Board Independence × 0.20) +
(Board Diversity × 0.15) +
(Director Tenure × 0.10) +
(Resolution Outcomes × 0.15) +
(Insider Sentiment × 0.10)

Scores are updated regularly as new data becomes available from AGMs, director appointments, and insider trading disclosures.

Data Sources

  • AGM Voting Results: Official results from NZX announcements
  • Director Information: Company annual reports and NZX disclosures
  • Insider Trading: SHINTR (Substantial Holder & Insider Trading) disclosures

Note: The GRS methodology is based on established best practices from the New Zealand Shareholders' Association (NZSA), the NZX Corporate Governance Code, and international proxy advisors like ISS and Glass Lewis. Scores are calculated objectively from publicly available data.