S has always represented a grade better than A.
“S as a ranking above A originates from Japanese games. Aside from Metal Gear Solid 4, it has also been used in other games, such as Gran Turismo series (driving licenses), Devil May Cry (level performance), Final Fantasy VII (chocobo classes), Guilty Gear (character rankings), and countless others.
While the origin is universally acknowledged as Japanese, apparently, no one really knows what it actually stands for. It’s been speculated that it stands for anything from Super to Special, but there’s no confirmation that I can find of any sort of “official” meaning.
Giant Bomb’s S-rank article states that because C was a failing grade in the Japanese school system, “S” was used to allow for a wider range of grades. See the following excerpt:”