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 Hammerson (LSE:HMSO), the U.K. and French retail property company.
Here are the key directors:
|John Nelson||(non-exec) Chairman until 9 May 2013|
|David Tyler||(non-exec) Chairman from 9 May 2013|
|David Atkins||Chief Executive|
|Timon Drakesmith||Finance Director|
|Peter Cole||Chief Investment Officer|
|Jean-Philippe Mouton||Executive Director|
Change of chairman
John Nelson has been chairman for nine years, but having recently taken up the chairman ship of Lloyds of London, plans to step down at the AGM next month.
He will be succeeded by David Tyler, who was appointed to the board at the beginning of the year. He has been chairman of FTSE 100 member J Sainsbury since 2009. Despite it being somewhat frowned-upon in the corporate governance code, there are a surprising number of dual FTSE 100 chairmanships. Sainsbury's large property portfolio might well be a matter of common interest.
A qualified accountant, Tyler's his background is mainly in finance. Having started his career on Unilever's management trainee program, he undertook various finance roles in that group before becoming finance director of Natwest Investment Bank, then auction house Christies, and then GUS where he played a major role in its demerger.
A chartered surveyor, David Atkins joined Hammerson in 1998 after a spell with property advisors DTZ, rising through the company to run the U.K. property portfolio in 2006 and becoming CEO in 2009. A recognized industry figure, he is chairman of EPRA, the European Public Real Estate Association. He is the architect of Hammerson's strategy to concentrate 100% on retail property, pulling out of office space last year. During his tenure as CEO, a difficult time for the property market, Hammerson's shares have stayed in line with the two biggest REITs, Land Securities and British Land.
Timon Drakesmith is a chartered accountant who joined Hammerson in 2011. Previously, he spent six years as finance director of FTSE 250 property company Great Portland Estates, where he was well-regarded for strengthening its balance sheet. He formerly worked for BZW and CSFB. Peter Cole is a chartered surveyor who joined Hammerson in 1989, joining the board in 1999. Jean-Philippe Mouton has been with the company since 2003, assuming responsibility for the French portfolio in 2006. He was elevated to the board this January.
Hammerson's non execs have a broad spread of backgrounds.
I analyzed management teams from five different angles to help work out a verdict. Here's my assessment:
|1. Reputation. Management CVs and track record.
|2. Performance. Success at the company.
|3. Board Composition. Skills, experience, balance
|4. Remuneration. Fairness of pay, link to performance.
|5. Directors' Holdings, compared to their pay.
Executives have 1 million pounds-worth each.
Company targets 150% of base pay for CEO, 100% for others.
Overall, Hammerson scores 16 out of 25, a middle order result. The difficult environment has not been conducive to property executives distinguishing themselves, but Hammerson's shareholders should feel in safe hands.
I've collated all my FTSE 100 boardroom verdicts on this summary page.
Buffett's favourite 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.
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Tony owns shares in Unilever and Great Portland Estates, but no other shares mentioned in this article. The Motley Fool has recommended Unilever. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.