The FTSE's Worst Boardroomshttp://www.fool.com/investing/general/2013/01/03/the-ftses-worst-boardrooms.aspx Tony Reading
January 3, 2013
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 firms are those run by executives collecting fat rewards as the underlying business goes to pot.
In recent weeks, I've been assessing the boardrooms of companies within the FTSE 100. Today I'm naming and shaming the bottom five companies from those that I've looked at so far. After analyzing 45 firms -- nearly half the FTSE -- here are the lowest scorers so far.
I look at management teams from five different angles, giving each a mark out of five. The scores are added to produce an overall score out of a maximum 25.
The structure has more of the feel of a bureaucratic European Union talking shop with qualified majority voting than of a company board. No doubt that's the political price BA had to pay to get the merger done, but it must be an additional impediment to CEO Willie Walsh's agenda to scythe through Iberia's bloated cost base.
The board's score is boosted by his reputation, forged at Aer Lingus and BA, but the jury is out on whether he will have the clout to successfully take on the Spanish unions.
RBS has made progress in cleaning out its balance sheet. I've been hypercritical of the paucity of the directors' holdings, but it's fair to say CEO Stephen Hester now has 1 million pounds-plus invested in the bank. But finance director Bruce Van Saun's shareholding represents just two months' worth of his base salary; it's that win-win situation where directors lose nothing if they fail, which I find corrosive.