In yet another example of growing investor focus on corporate governance and corporate risk in particular, proxy advisory firm RiskMetrics Group ("RMG") recently unveiled its new corporate governance

GRId will measure a company's level of risk based on market best practices in four areas: (i) audit, (ii) board structure, (iii) compensation/remuneration and (iv) shareholder rights. Using a set of 60-80 questions that assess a company's corporate governance dynamics, GRId will identify for each of these four areas either a low, medium or high level of concern that the company's practices may result in governance- related risk. Unlike CGQ, a company's GRId ratings will be based on its company-specific practices only and will not be directly measured against the practices of other companies. A company's ratings in these four areas will replace the current two CGQ percentile-based ratings generated for each company (which compare the company with other companies in the same index and the same industry group). Also, unlike CGQ, in an effort by RiskMetrics to tie its corporate governance rating system to its benchmark proxy voting policy, GRId will be based on the same principles underlying RMG's proxy voting policy. As an example of how GRId will work, with respect to board structure, factors that would indicate a low level of concern (i.e., that best practices were in place) include an independent board, independent committees, strong director meeting attendance, a non-executive chairman, disclosure of board guidelines and low levels of withhold votes or votes against nominees. With respect to compensation, favorable factors would include three-year minimum equity award vesting schedules, no option repricings or exchanges without shareholder approval and the absence of change in control agreements.