The People Who Run Morrison Supermarkets

LONDON -- Management can make all the difference to a company's success -- and thus its share price.

The best companies are those run by talented and experienced leaders with strong vested interests in the success of the business, held in check by a board with sound financial and business acumen. Some of the worst investments to hold are those run by executives collecting fat rewards as the underlying business goes to pot.

In this series, I'm assessing the boardrooms of companies within the FTSE 100. I hope to separate the management teams that are worth following from those that are not. Today I am looking at Morrison (WM) Supermarkets (LSE: MRW  ) , the U.K.'s fourth-largest supermarket group.

Here are the key directors:

Director

Position

Sir Ian Gibson

Nonexecutive chairman

Dalton Philips

Chief executive

Richard Pennycook

Finance director

Sir Ian Gibson joined the board as deputy chairman in September 2007 in anticipation of his taking over the chairmanship from Sir Ken Morrison upon Morrison's retirement in March 2008 after 55 years of service -- a big job to fill. Though Sir Ian spent 30 years in the car industry with Ford and Nissan, he was no stranger to the supermarket sector: He was deputy chairman of ASDA in the late 1990s.

He has held a slew of nonexecutive posts, including a position in the prestigious Court of the Bank of England, but these have not been entirely without controversy. He was a nonexecutive director of Northern Rock at the time when it had to be rescued by the government, and he stood down early from the chairmanship of Trinity Mirror when that company was embroiled in the "shareholder spring" earlier this year.

Surprise
Dalton Philips was a surprise appointment when in March 2010 he succeeded Marc Bolland, who moved on to become CEO of Marks & Spencer. Phillips was previously chief operating officer of Canada's largest retailer, Loblaw. His earlier career was spent in retail in various groups and companies, including a seven-year stint at Wal-Mart, where he rose to become chief operating officer of Germany.

Richard Pennycook was seen as a credible internal candidate for the post of CEO. Instead, the highly regarded finance director is set to retire next June. He has been in the post since 2005, joining from the RAC, where he was finance director.

Pennycook has a breadth of responsibilities including finance, IT, strategy, and "multichannel development." That latter aspect is perhaps where Morrison is most seen as the Johnny-come-lately of the supermarket sector, being behind the trend in online sales, convenience stores, and nonfood merchandising.

Oddballs
Morrison has a small board for a FTSE 100 company, with just four nonexecs making a total of seven directors. The nonexecs bring a smattering of retail experience but overall look a slightly odd bunch. I'm not sure, for example, exactly what the CEO of International Power brings to the table.

I analyze management teams from five different angles to help work out a verdict. Here's my assessment:

Factor

Comment

Score (out of 5)

Reputation -- management CVs and track record

Fair

3

Performance -- success at the company

Average

3

Board composition -- skills, experience, and balance

Odd

2

Remuneration -- fairness of pay and link to performance

Uncontroversial

3

Directors' holdings -- compared to their pay

Execs have about one year's basic salary's worth of shares

3

Overall, Morrison scores 14 out of 25 -- a middling to low result. The composition of the board seems to have little logic, the chairman is busy and not wholly uncontroversial, and the seasoned finance director is leaving. The CEO is still relatively new and has been hit by a number of senior-level defections recently, leaving the management team untested.

I've collated all my FTSE 100 boardroom verdicts on this summary page. I hope it helps with your research.

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