What you need to know about the boards of Anglo American plc (LON: AAL), Burberry Group plc (LON: BRBY), NEXT plc (LON: NXT), Reckitt Benckiser Group Plc (LON: RB.) and Rio Tinto plc (LON: RIO).
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: Anglo American (LSE: AAL), Burberry (LSE: BRBY), Next (LSE: NXT), Reckitt Benckiser (LSE: RB) and Rio Tinto (LSE: RIO). Today I am going to summarise what I found.
Five FTSE boardrooms
I analyse management teams from five different angles, giving each a score out of five to make a maximum score of 25. Here's my overall assessment.
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Burberry and Next take the honours in this batch, which marks the halfway point of my trawl through the FTSE 100's boardrooms. I've collated all my FTSE 100 boardroom verdicts on this summary page, and you can read more about each company's board by following the links in the text below.
A Three Bagger and a Five Bagger
Burberry and Next score a top quartile result of 19, with management at both companies having delivered good results for shareholders.
In Burberry's case, the all female executive team have been in situ for six years, and have presided over a tripling of the share price. Remuneration is generous and has been contentious in the past, but shareholders have nevertheless had a good deal. Investors might also question how effective chairman Sir John Peace can be, when he has two other FTSE 100 boards to chair, but their only real concern is likely to be if CEO Angela Ahrendts decides to join the current exodus of women from the top of FTSE companies.
Next also has a high-profile CEO, Lord Wolfson of Apsley Guise, the Tory peer. He's the son of former chairman David Wolfson, which no doubt helped his rise through the company from sales assistant to CEO at the age of 33. But few would find fault in the five-fold increase in the share price which has taken place during his 11-year tenure.
Change of Guard
It's notable that Burberry and Next have long-serving management teams. In contrast, the companies lower down the table have had, or are in the course of, a change of guard.
Rio Tinto has recently – abruptly - changed CEO. But new boss Sam Walsh formerly ran Rio's iron ore division, the most important, and he's been with the company for over 20 years, so he's a safe pair of hands. It also ensures continuity in a year when the finance director is due to leave.
Anglo American has a more leisurely pace to replacing its CEO. After a long period of investor discontent, Cynthia Carroll formally steps down in April, to be succeeded by Mark Cutifani. His operational background, and knowledge of the intricacies of South African labour relations and politics, stands him in good stead to turn the company around.
Also for the chop is Reckitt Benckiser's finance director. Her face didn't fit with CEO Rakesh Kapoor, who only took over less than 18 months ago. He's refocusing the company but is perhaps still in the shadow of his extremely successful long-serving predecessor.
Buffett's favourite FTSE share
Let me finish by adding that legendary investor Warren Buffett has always looked for impressive management teams when pinpointing which shares to buy. So I think it's important to tell you that the billionaire stock-picker has recently acquired a substantial stake in a prominent FTSE 100 company.
A special free report from The Motley Fool -- "The One UK Share Warren Buffett Loves" -- explains Mr Buffett's purchase and investing logic in full.
And Mr 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.
> Tony owns shares in Rio Tinto and Reckitt Benckiser but no other shares mentioned in this article. The Motley Fool has recommend Burberry.