What you need to know about the top executives of retailer Marks and Spencer Group Plc (LON: MKS)
Management can make all the difference to a company's success and thus its share price.
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 Marks and Spencer (LSE: MKS), the retailer that suffered from poor Christmas trading.
Here are the key directors:
|Robert Swannell||(non-exec) Chairman|
|Marc Bolland||Chief Executive|
|Alan Stewart||Finance Director|
|John Dixon||Executive Director, general merchandise|
|Steve Rowe||Executive Director, food|
|Steven Sharp||Executive Director, marketing|
|Laura Wade-Gery||Executive Director, multi-channel e-commerce|
Phew! What a list. I like it when boards include some functional executives but M&S goes the whole nine yards, with chairman Robert Swannell umpiring six executives and seven non-execs. I wonder if they line up on opposite sides of the table.
£4 a share
Mr Swannell became chairman in January 2011, but his association with the company goes back much further. A former investment banker who spent 30 years with Schroders and Citigroup, he was brought in as an advisor to M&S by its former controversial executive chairman Sir Stuart Rose. He advised the company in its rejection of Sir Philip Green's £4-a-share offer in 2004. They're worth £3.80 today, though a bidder would have to offer nearer £5.
Mr Swannell's earlier FTSE chairmanship was uninspiring. He chaired HMV from 2009 to 2011, during which time its profits collapsed, it broke its banking covenants and its share price dropped from 133p to 16p.
CEO Marc Bolland had been in the job a year before Mr Swannell became chairman. After a career rising through the ranks of Heineken, Dutchman Mr Bolland was appointed CEO of Wm Morrison in 2006 and was credited with turning the chain around after it had issued five profits warnings.
At M&S he immediately set about introducing a new strategy, substantially reversing that of Stuart Rose. During his tenure, M&S's food segment -- Mr Bolland's background -- has prospered, but general merchandise has performed poorly and there's no doubt Mr Bolland is now on probation. He's staked his future on the group's autumn fashion collection.
He's shaken up the management in general merchandise, bringing in a new fashion team and moving John Dixon from food to head the division. A candidate for CEO when Marc Bolland was appointed, the broadening of Mr Dixon's experience will count in spades if the incumbent gets the chop.
Finance director Alan Stewart joined shortly after Marc Bolland. He was FD at WH Smith from 2005 to 2008 when the company turned around its performance, and was described as a 'cost-cutting supremo'.
How to sack the CEO
An impressive bunch of non-execs are led by senior independent director Jan du Plessis, the chairman of Rio Tinto who this month abruptly sacked its CEO. He could no doubt advise Robert Swannell on how to do the deed or, perhaps, might be best placed to step in if the City loses patience with the chairman as well.
I analyse management teams from five different angles to help work out a verdict. Here's my assessment:
|1. Reputation. Management CVs and track record.|
Track record was mostly good...
|2. Performance. Success at the company.|
... until they joined the company.
|3. Board Composition. Skills, experience, balance|
|4. Remuneration. Fairness of pay, link to performance.|
|5. Directors' Holdings, compared to their pay.|
Fairly low compared to pay.
Overall, M&S scores 11 out of 25, a poor result. Unless Mr Bolland can pull a rabbit out the hat soon, there'll be some changes.
I've collated all my FTSE 100 boardroom verdicts on this summary page.
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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.
> Tony does not own any shares mentioned in this article.