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Baldrige Index Beaten by S&P 500 After Nine Winning Years

For Immediate Release: May 15, 2003

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Contact: Jan Kosko
301-975-2767

For the first time since the study began in 1995, the “Baldrige Index” has under- performed the Standard & Poor’s 500. The Baldrige Index is a fictitious stock fund made up of publicly traded U.S. companies that received the Malcolm Baldrige National Quality Award between 1992 and 2001.

Throughout the nine years of the study, the Baldrige Index consistently has outperformed the S&P 500 by as much as 6 to 1. “These studies have shown that businesses that excel in everything they do can achieve success in many areas, including the bottom line,” said Harry Hertz, director of the National Institute of Standards and Technology (NIST) Baldrige National Quality Program. “This past year has been a particularly tough one for technology stocks, which are a very significant component of the Baldrige portfolio. But, I am confident that in the coming years, the Baldrige Award winners will continue to excel in their performance, including in their bottom line,” he said.

In this latest study, NIST hypothetically “invested” $1,000 in the two whole company winners—Eastman Chemical Company (1993 winner) and Solectron Corp. (1991 and 1997 winner)—and the parent companies of 19 subsidiary winners. Another hypothetical $1,000 was invested in the S&P 500 for the same time period. The investment was tracked from the first business day of the month following the announcement of the Baldrige Award recipients (or the date when they began public trading, if it is later) through Dec. 2, 2002. The two whole company award winners underperformed the S&P 500 by about -0.71 to 1, with a -34.19 percent return compared to a 48.02 percent return for the S&P 500 over the multiyear period. The group of 19 subsidiary winners underperformed the S&P 500 by approximately -0.53 to 1, with a -23.74 percent return compared to a 45.16 percent return for the S&P 500.

In last year’s study, the same two whole company winners—Eastman Chemical and Solectron—outperformed the S&P 500 by about 4.5 to 1, while the parent companies of subsidiary winners outperformed the S&P 500 by about 3 to 1.

More information on all nine of the Baldrige Index studies is available at http://baldrige.nist.gov/Stock_Studies.htm.