A Closer Look at 5 FTSE Boardrooms

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 recent weeks, I've assessed the boardrooms of five companies within the FTSE 100:Aggreko  (LSE: AGK  ) , ENRC  (LSE: ENRC  ) , Hammerson  (LSE: HMSO  ) , IMI  (LSE: IMI  ) and Severn Trent  (LSE: SVT  ) . Today I am going to summarize what I found.

Five FTSE boardrooms
I analyze management teams from five different angles, giving each a score out of five to make a maximum total score of 25. Here's my overall assessment:

 

Reputa-
tion

Perform-
ance

Composi-
tion

Remunera-
tion

Share-
holdings

Overall
Score

IMI

4

5

3

3

4

19

Aggreko

3

5

3

2

4

17

Hammerson

3

3

3

3

4

16

Severn Trent

3

3

4

2

2

14

ENRC

1

2

1

2

3

9

It's perhaps a good thing that the bottom two in this round up may shortly no longer be on the stock exchange.

Long tenure
Engineer IMI is one of the smallest companies in the FTSE 100 but has one of the highest boardroom scores. Like many high scoring firms the long tenure of a successful CEO has boosted its score, and like many smaller FTSE companies the executives have spent much of their career with the same firm.

IMI's Martin Lamb has seen a quadrupling of the share price in the 12 years he's been at the top, thanks to a strategy of focusing on product niches and relocating manufacturing to low-cost countries. Three executives have over £2m-worth of shares each, a proportion of shares-to-salary that would shame most blue-chip directors.

Temporary power provider Aggreko's CEO has an even more impressive track record. The shares have increased by a factor of 14 in the ten years that the eccentric Rupert Soames has been in charge. His remuneration has been criticized, and the shares have pulled back somewhat from last autumn's highs, but long-term shareholders could hardly complain.

Hammerson's board is workman-like but unremarkable. CEO David Atkins has focused the REIT exclusively on retail property but the shares have broadly stayed in line with the sector during his four years at the top, which hasn't been an auspicious time for property executives to distinguish themselves.

Delisting
Since looking at Severn Trent, it has become the latest water utility to be subject to a foreign private equity bid, which is ultimately likely to prevail. The successful and innovative CEO is planning to step down anyway, and I'd concluded that the board had a "whiff of being self-serving". They'll want to secure good payoffs, then, as they won't make much from their paltry shareholdings.

ENRC has become a bye-word for poor corporate governance, and is looking likely to be taken private by the oligarchs who control it. Now on its second executive chairman whose role is to clean the company up, if Gerhard Ammann fails, or doesn't have the opportunity to do so, then the company will leave a permanent stain on the reputation of the London Stock Exchange.

I've collated all my FTSE 100 boardroom verdicts on this summary page, and you can read more about each company by following the relevant links. I hope my research can assist your investment decisions.

Buffett's favorite FTSE share
Legendary investor Warren Buffett has always looked for impressive management teams when picking stocks. His latest acquisition, Heinz, has long had a reputation for strong management. Indeed Buffett praised its "excellent management" alongside its high quality products and continuous innovation.

So I think it's important to tell you about the FTSE 100 company in which the billionaire stock-picker has a substantial stake. A special free report from The Motley Fool -- "The One U.K. Share Warren Buffett Loves" -- explains Buffett's purchase and investing logic in full.

And Buffett, don't forget, rarely invests outside his native United States, which to my mind makes this British blue chip -- and its management -- all the more attractive. So why not download the report today? It's totally free and comes with no further obligation.

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