What you need to know about the top executives of packaging group Rexam (LON:REX).
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 Rexam (LSE: REX), the world's largest manufacturer of drinks cans.
Here are the key directors:
|Stuart Chambers||(non-exec) Chairman|
|Graham Chipchase||Chief Executive|
|David Robbie||Finance Director|
Stuart Graham has been chairman for just over twelve months, but he's no stranger to FTSE 100 boardrooms as a non-executive director of Tesco and Smiths Group. He was formerly CEO of glassmaker Pilkington and Japanese group NSG which acquired Pilkington. He previously worked for Mars, so is well-versed in both consumer products and packaging.
Graham Chipchase is a chartered accountant who had spent his career in finance roles in manufacturing with BOC and GKN before joining the board of Rexam as finance director in 2003. He moved into an operational role as head of the plastics packaging group in 2005 and was tipped at the time as a potential candidate for the top job. He was appointed CEO in January 2010.
At the time one analyst described it as a 'poisoned chalice'. Rexam was then struggling with over-capacity and overburdened with debt, and management had upset investors with a large rights issue.
However Mr Chipchase took an axe to costs, sold off businesses including much of the plastics packaging operation, and took the company into emerging markets. The result has been a 70% rise in the share price during his tenure.
David Robbie has been finance director since Graham Chipchase moved out of the role in 2005. His tenure thus pre-dates Rexam's troubles. He had previously been finance director of P&O Nedlloyd and held finance roles with Invensys.
In its four non-execs, Rexam combines a highly relevant mix of skill-sets and experience: a former FD of engineer Smiths Group, a senior Unilever marketing executive, the former CEO of French aluminium and packaging group Pechiney, and a former McKinsey consultant.
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.|
|2. Performance. Success at the company.|
|3. Board Composition. Skills, experience, balance|
|4. Remuneration. Fairness of pay, link to performance.|
|5. Directors’ Holdings, compared to their pay.|
CEO has £2m worth, FD £1m.
Overall, Rexam scores 19 out of 25, a very good result which is especially impressive for one of the FTSE's smaller firms. The company has had its problems, but the CEO looks on top of them.
I've collated all my FTSE 100 boardroom verdicts on this summary page.
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> Tony owns shares in Tesco, Smiths Group and Unilever, but no other shares mentioned in this article. The Motley Fool owns shares in Tesco and has recommended Unilever.