What you need to know about the bank’s top executives.
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 Standard Chartered (LSE: STAN). I've collated all my FTSE 100 boardroom verdicts on this summary page.
Here are Standard Chartered’s key directors:
|Sir John Peace||(non-exec) Chairman|
|Peter Sands||Chief Executive|
|Richard Meddings||Finance Director|
|Steve Bertamini||Executive Director|
|Jaspal Bindra||Executive Director|
|Mike Rees||Executive Director|
|V. Shankar||Executive Director|
Sir John Peace joined the board in 2007 and has been chairman since 2009. The former CEO of GUS from which FTSE 100 members Burberry (LSE: BRBY) and Experian (LSE: EXPN) were both spun off, he is also chairman of those two companies. That makes Sir John, who has no banking background, especially busy fronting the bank's fight back against allegations that it broke US sanctions against Iran.
A former McKinsey consultant, Peter Sands served as finance director from 2002, becoming CEO in 2006. He was recruited by former CEO Lord Mervyn Davies, and the two of them are the architects of the strategy that has made Standard Chartered so successful in recent years.
Richard Meddings is the one of the top three steeped in banking, joining the board in 2000 to becoming finance director in 2006.
Both Sands and Meddings have excellent reputations, with Sands tipped as a possible future Governor of the Bank of England and Meddings as possibly the next CEO of Barclays (LSE: BARC). Together they drew up a rescue plan for the banking sector that was adopted by Gordon Brown's government and became the blueprint for the bailouts of RBS (LSE: RBS) and Lloyds (LSE: LLOY).
Whether their reputations, and positions at Standard Chartered, remain intact remains to be seen.
The bank’s other executive directors have strong backgrounds in banking and finance. Ten non-execs include the former Prime Minister of South Korea and former HSBC (LSE: HSBA) finance director Richard Delbridge.
I analyse management teams from five different angles. Here's my assessment:
|1. Reputation. Management CVs and track record.|
|2. Performance. Success at the company.|
Made StanChart the safe and steady bank.
|3. Board Composition. Skills, experience, balance|
|4. Remuneration. Fairness of pay, link to performance.|
|5. Directors’ Holdings, compared to their pay.|
Execs all have £1m in shares. Chairman negligible.
Overall, Standard Chartered scores 16 out of 25, a very decent result. Standard Chartered was almost universally respected as a safe and sound bank which survived the financial crash without difficulty, had creditable ethics, and is focused on growth markets.
At first sight, its behaviour in regard to sanctions looks no different from several other banks that have quietly agreed fines. But Standard Chartered has encountered what happens when politics and business collide. That could be costly for the board and investors alike.
Buffett's favourite FTSE share
Let me finish by adding 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.
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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.
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> Tony owns shares in Standard Chartered and HSBC but no other shares mentioned in this article. The Motley Fool owns shares in Standard Chartered.