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 (UKX). I hope to separate the management teams that are worth following from those that are not. Today I am looking at Aggreko (AGK +0.00%), the global leader in the provision of temporary power for global customers, from emerging markets to the Olympics.
Here are the key directors:
|
Director |
Position |
|---|---|
|
Ken Hanna |
(non-exec) Chairman |
|
Rupert Soames |
Chief Executive |
|
Angus Cockburn |
Finance Director |
|
Debajit Das |
Regional Director-Asia Pacific |
|
Asterios Satrazemis |
Regional Director-Americas |
|
David Taylor-Smith |
Regional Director-EMEA |
Ken Hanna has been chairman for 12 months, though he's been on the board since 2010. A chartered accountant, he spent most of his career in finance roles with a slew of well-known names. He is a former finance director of Cadbury Schweppes, Avis Europe, United Distillers, Sygen and Dalgety.
He is also chairman of FTSE 250 car dealership Inchcape and a non-exec of Tesco. The shareholder body Pirc has questioned his "time commitment", although his multiple commitments look less onerous than many FTSE 100 chairmen.
14-bagger
Rupert Soames has been CEO since 2003. He was previously a divisional head of software provider Misys, and before that spent 15 years with GEC.
During his near-ten year time at the helm, Aggreko's profits have increased by a factor of five, and the shares have increased by a factor of 14, despite a significant pull-back since last autumillion following a profit warning. Much of that growth has come from Aggreko moving into emerging markets, a strategy with which Mr Soames is associated.
Eccentric
Soames is evidently an eccentric boss. The Economist described him as "an extroverted, mucking-in, buccaneering sort of toff" like his grandfather, Winston Churchill. The Telegraph said he had "the air of a naughty schoolboy".
Angus Cockburn has been finance director since 2000, predating Soames' arrival. He is a chartered accountant who has worked for KPMG and subsequently in finance roles with PepsiCo before joining Dawson International, where he undertook management roles.
Regional structure
Aggreko moved to a geographic management structure at the beginning of this year, and its three regional directors were appointed to the board as a consequence. Two were internal appointments.
The five executives are matched up against five non-execs, putting the onus on the chairman not to let management have an easy time of it. The non-execs include two women appointed last year after Aggreko was criticised for its all-male board.
Pirc called for abstention on the remuneration report last year, describing the CEO's pay as "excessive" after a large share award, but shareholders largely ignored it.
I analyze management teams from five different angles to help work out a verdict. Here's my assessment:
|
1. Reputation. Management CVs and track record. |
Score 3/5 |
|
2. Performance. Success at the company. |
Score 5/5 |
|
3. Board Composition. Skills, experience, balance |
Score 3/5 |
|
4. Remuneration. Fairness of pay, link to performance. |
Score 2/5 |
|
5. Directors' Holdings, compared to their pay. |
Score 4/5 |
Overall, Aggreko scores 17 out of 25, a moderately good result. It's an odd-looking board, but over the long-term it has delivered handsomely.
I've collated all my FTSE 100 boardroom verdicts on this summary page.
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