Are the boards of International Consolidated Airlines Grp (LON: IAG), Royal Bank of Scotland Group plc (LON: RBS), Barclays PLC (LON: BARC), Aviva plc (LON: AV) and Marks and Spencer Group Plc (LON: MKS) up to scratch?
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 the 60 companies that I have looked at 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. These are the bottom five:
| | Reputation | Performance | Composition | Remuneration | Shareholdings | Overall
Score |
|---|
| Marks and Spencer | 3 | 2 | 3 | 1 | 2 | 11 |
| Aviva | 4 | 2 | 2 | 2 | 1 | 11 |
| Barclays | 3 | 2 | 1 | 1 | 4 | 11 |
| RBS | 3 | 2 | 3 | 2 | 0 | 10 |
| International Consolidated Airlines | 4 | 3 | 0 | 2 | 1 | 10 |
It's a measure of how fast-moving things can be that some of these boards would get higher scores now than when I originally analysed them. In particular things have changed at RBS (LSE: RBS), Barclays (LSE: BARC) and Aviva (LSE: AV).
Deservedly bottom
Still deserving of its bottom spot is International Consolidated Airlines Group (LSE: IAG). Its complicated structure must be a real constraint. IAG is a holding company, but British Airways and Iberia each have their own boards which retain considerable autonomy.
CEO Willie Walsh came to the job with a great reputation forged at Aer Lingus and BA, but it remains to be seen whether he will have the clout to successfully take on the Spanish unions. The mixed results of a successful year at BA and underperformance at Iberia resulted in Mr Walsh earning less last year than BA's head.
All Change
RBS was originally marked-down for the paucity of directors' shareholdings, but CEO Stephen Hester now has half a respectable £1.5m-worth. Finance director Bruce Van Saun still has just a £140k holding. RBS would also now get higher marks for performance, having demonstrated considerable progress in cleaning out its balance sheet, and successfully floating Direct Line last year.
Barclays was the first company I looked at in this series, and its board has changed beyond recognition in that time: a new Chairman, a new CEO, and a change of guard amongst the non-execs. Oh, and the finance director is to step down: he's just waiting for a successor to be appointed. Barclays has a new-found morality (we're told), and a new strategy under CEO Anthony Jenkins.
Unpopular
Things have also moved quickly at Aviva, where chairman John McFarlane shook the company up, including the sale of the its US unit. He recruited CEO Mark Wilson who restructured management -- in the process he dispensed with the services of Trevor Matthews, who had been recruited with a golden hello of £2m just a year earlier. A surprise dividend cut has made the pair unpopular with investors.
Marks and Spencer's (LSE: MKS) CEO Marc Bolland is three years into a turnaround programme at the company, but though he's reinvigorated its food offering, its non-food sector is hurting. Some fund managers have suggested that this year's autumn clothing range will determine whether Mr Bolland remains in fashion himself.
I've collated all my FTSE 100 boardroom verdicts on this summary page. I hope my research can assist your investment decisions.
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> Tony owns shares in Aviva but no other shares mentioned in this article.
