The Men and Women Who Run Kingfisher

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 Kingfisher  (LSE: KGF  ) , owner of B&Q and Europe's largest DIY retail chain.

Here are the key directors:



Daniel Bernard

(non-exec) Chairman

Ian Cheshire

Chief Executive

Karen Witts

Finance Director

Kevin O'Byrne

CEO, B&Q and Koctas

Phillipe Tible

CEO, Castorama and Brico

Frenchman Daniel Bernard joined the board as deputy chairman in 2006, stepping up to become chairman in 2009. He has worked for several European retailers, and was chairman and CEO of Carrefour from 1998 to 2005.

Ian Cheshire was schooled at Boston Consulting Group, Guinness (where he was Ernest Saunders's executive assistant), and Sears, before joining Kingfisher in 1998 as strategy director. He became CEO 10 years later in 2008, after being B&Q CEO from 2005.

Checkered history
He has thus seen Kingfisher's checkered history first hand. The group grew to be a sprawling conglomerate in the late 20th century, before a failed bid to buy Asda led to shareholder pressure to refocus.

Mr Cheshire has increased operating margins, with emphasis on exploiting synergies between the company's various international operations. The share price has doubled during his tenure, and though barely above what it was 10 years ago, that's a considerable achievement given the economic background. The business is sensitive to consumer spending and housing markets in the U.K. and Europe.

A chartered accountant, Karen Witts has worked for several companies in finance roles, and was CFO of BT retail and CFO of Vodafone Middle East and Asian region before joining Kingfisher in October 2012.

Witts took up the job vacated by Kevin O'Byrne, who had been finance director since 2008. He had previously been finance director of DSG, and was poached after being passed over for the top job there.

Philippe Tible has spent his career in the French retail industry, joining Kingfisher's French subsidiary in 2003. He joined Kingfisher's board in 2012 as part of the reshuffle involving O'Byrne and Witts, intended, in part, to broaden the executive team's experience. Also promoted to the board was the U.K. CEO, but he unexpectedly decamped to be CEO of the Co-op last December.

An impressive line-up of six non-execs includes a former CEO of Ikea, and CFO of Cadbury.

Ian Cheshire has 3.8 million pounds' worth of shares, but the other executive directors, albeit recently appointed, have much smaller holdings, and sold substantial option awards last year.

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

1. ReputationManagement CVs and track record.


Score 3/5

2. PerformanceSuccess at the company.

Strong, against a difficult background.

Score 4/5

3. Board CompositionSkills, experience, balance


Score 4/5

4. Remuneration. Fairness of pay, link to performance.


Score 3/5

5. Directors' Holdingscompared to their pay.

See above.

Score 2/5

Overall, Kingfisher scores 16 out of 25, a bottom-half result. The new board will need to bed down before shareholders can have full confidence in it, and hopefully, the new executives will demonstrate their own confidence through share ownership.

I've collated all my FTSE 100 boardroom verdicts on this summary page.

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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10/27/2016 6:47 AM
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