Wall Thickness
Methodology

Our comprehensive framework for measuring corporate transparency and executive accountability. Discover how we calculate wall thickness and what it reveals about corporate governance.

The Wall Thickness Algorithm

Our Wall Thickness Algorithm quantifies how effectively corporate leadership insulates itself from accountability to stakeholders. We analyze multiple dimensions of corporate structure, compensation, and governance to produce a unified metric.

🏰
Fortress
🏢
Thick
🏠
Medium
⚡
Thin

Core Metrics & Calculations

Management Layers
Weight: 25%

Measures the organizational complexity between stakeholders and decision-makers.

Formula:
management_score = (layers - 3) / 10
• 3-5 layers: Low complexity (Thin)
• 6-8 layers: Medium complexity
• 9+ layers: High complexity (Fortress)

Data Sources:

  • • SEC proxy statements (DEF 14A)
  • • Corporate organizational charts
  • • Executive reporting structures
Compensation Concentration
Weight: 30%

Analyzes how compensation is distributed among top executives vs. median worker pay.

Formula:
concentration = sum(top_5_comp) / (median_worker * employees)
• <0.001: Low concentration (Thin)
• 0.001-0.01: Medium concentration
• >0.01: High concentration (Fortress)

Key Indicators:

  • • CEO-to-median-worker pay ratio
  • • Total named executive compensation
  • • Stock option concentration
Board Independence
Weight: 20%

Evaluates the independence of board members from management influence.

Formula:
independence = 1 - (independent_directors / total_directors)
• >80% independent: High independence (Thin)
• 60-80% independent: Medium independence
• <60% independent: Low independence (Fortress)

Independence Factors:

  • • Financial relationships with company
  • • Family connections to executives
  • • Former employee status
Executive Turnover
Weight: 15%

Measures leadership stability and potential for entrenched management.

Formula:
turnover_impact = 1 - (annual_turnover_rate / 0.2)
• >15% annual turnover: High turnover (Thin)
• 10-15% turnover: Medium turnover
• <10% turnover: Low turnover (Fortress)

Turnover Analysis:

  • • C-suite position changes (5 years)
  • • Board member rotation patterns
  • • Succession planning transparency

Algorithm Implementation

Wall Thickness Calculation
Core Algorithm:
wall_thickness_score = (
management_layers * 0.25 +
compensation_concentration * 0.30 +
board_independence * 0.20 +
stock_options_ratio * 0.10 +
executive_turnover * 0.15
)
Classification Thresholds:
⚡ Thin (0.0-0.3):
High transparency, accountable leadership
🏠 Medium (0.3-0.6):
Moderate barriers, mixed accountability
🏢 Thick (0.6-0.8):
Significant barriers, limited transparency
🏰 Fortress (0.8-1.0):
Maximum insulation, minimal accountability
Data Sources
SEC EDGAR Database
10-K, 10-Q, DEF 14A filings
Proxy Statements
Executive compensation, board composition
Corporate Governance Reports
Board independence, committee structures
Annual Reports
Organizational charts, pay ratios
Limitations & Disclaimers
Data Availability
Metrics depend on public disclosure requirements and filing compliance.
Temporal Considerations
Analysis reflects most recent available data, typically 12-18 months lag.
Industry Context
Some metrics may vary by industry structure and regulatory environment.

Applications & Use Cases

Investor Analysis

Evaluate governance quality and management accountability before making investment decisions.

  • • ESG investment screening
  • • Governance risk assessment
  • • Shareholder activism targets
Academic Research

Quantitative framework for studying corporate governance and executive compensation trends.

  • • Corporate governance studies
  • • Executive compensation research
  • • Stakeholder capitalism analysis
Public Policy

Evidence-based insights for regulatory reform and corporate accountability initiatives.

  • • Regulatory impact assessment
  • • Corporate reform advocacy
  • • Transparency benchmarking

Ready to Break Some Walls?

Now that you understand our methodology, explore the rankings to see which companies have built the thickest walls around their executives.

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