Fastenal 8th On Reputation-Based Top 100; Pentair Makes Cut
Winona-based Fastenal Company ranks among one of the world’s 10 best companies in terms of it and its CEO’s reputation, according to a recent study by the Harvard Business Review and the Reputation Institute.
Fastenal and Pentair Ltd. represented Minnesota in HBR’s original November 2014 ranking of the 100 best performing CEOs at 100th and 68th, respectively. That list ranked CEOs according to the increases their companies had seen in total shareholder return and market capitalization across their whole tenures. But in its revised ranking, released late last week, the HBR cited the increasing rate of CEOs and companies being “called to account for impacts on employees, communities, governments and society at large.”
“The changing expectations have magnified the relevance of non-financial metrics and the need to paint a more complete picture of a CEO’s performance.”
The HBR enlisted the Reputation Institute to add a nonfinancial index to the list, using a metric that compiled scores for each company’s workplace, citizenship and governance. On average, the study found, high-reputation companies have higher returns, deliver higher earnings multiples and other key measures on which investors assess corporate performance.
“The most holistic measure of a CEO’s contribution over his or her tenure would be a reliable answer to one question: How much better or worse is the overall reputation of the company compared to the day this leader stepped into the role? A great CEO’s legacy is never as one-dimensional as the ledger.”
Fastenal was one of the starkest examples of a company climbing the list, as its 100th place initial ranking improved 67 spots to 33rd after it scored 8th place overall in HBR’s re-ranking based purely on reputations in non-financial, or social, areas. Meanwhile, Pentair ranked 76th in the newly weighted list, slipping eight spots after ranking 63rd in the new social standings.
Fastenal sells a wide array of industrial and construction supplies through its 2,700 stores and 14 distribution centers. It is one of Minnesota’s 20 largest public companies with annual revenue of $3.7 billion and 18,400 employees. Founded in 1967, its stock price has doubled in the last five years to around $45 a share today.
Pentair Ltd., is also one of the largest public companies with a presence in Minnesota. Though its primary operations are still based out of Golden Valley, Pentair merged with a division of Switzerland-based Tyco International in a $5.3 billion deal in 2012. The company makes valves, filters, and pumps for the energy industry. Pentair employs approximately 30,000 people worldwide and reported revenues of $7 billion for 2014. Last year, shareholders approved the company's plan to reincorporate in Ireland.