What you need to know about the top executives of plumbing supplies distributor Wolseley plc (LON:WOS)
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 Wolseley (LSE: WOS) (NASDAQOTH: WOSCY.US), the world's largest trade distributor of plumbing supplies.
Here are the key directors:
|Gareth Davis||(non-exec) Chairman|
|Ian Meakins||Chief Executive|
|John Martin||Finance Director|
|Frank Roach||Chief Executive, North America|
Gareth Davis has been a director since 2003 and became chairman in January 2011. It was the second of three chairmanships: he is also chairman of FTSE 250 firms William Hill (since 2010) and D S Smith (since 2012). On taking the third job he argued that 'even in a worst-case scenario, it's do-able' but Wolseley shareholders might not wish that theory to be tested.
In Mr Davis's executive career he was very much a one-company man. He spent 37 years at Imperial Tobacco, leading it as chief executive for 14 years after its demerger from Hanson until 2010.
Ian Meakins was parachuted in as CEO in mid-2009. Prior to that he was CEO of foreign-exchange firm Travelex and of Alliance Unichem, before which he spent 12 years with Diageo, where he rose to be President of global supply.
He was brought in after the previous CEO resigned abruptly when Wolseley ran into difficulties after a debt-fuelled acquisition spree hit the buffers as the housing market collapsed. The company was forced to undertake a highly-dilutive £1bn rights issue in 2009 after reporting a £880m first-half loss.
Under Mr Meakins, a £3bn debt pile has been eliminated, costs slashed and profitability restored. Though Wolseley still faces a challenging market, the restoration of financial stability has been rewarded with a doubling of the share price during Mr Meakins's tenure.
One of Mr Meakins's first acts as CEO was to clear out the boardroom, in the process replacing the FD with John Martin, who had been FD at Travelex when Mr Meakins was CEO. A chartered accountant, Mr Martin had become a partner of buyout firm Alchemy Partners.
Mr Meakins also axed the European divisional head, but kept the US division head Frank Roach. He had joined Wolseley's US subsidiary Ferguson in 1976, and had been appointed head of Wolseley's US operations in 2005.
Only one of Wolseley's six non-execs were on the board under the previous management. They have a variety of backgrounds though there is a preponderance of accountants, perhaps intended to restore the company's reputation for being boring!
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|
Busy chairman, odd mix of non-execs
|4. Remuneration. Fairness of pay, link to performance.|
|5. Directors’ Holdings, compared to their pay.|
CEO has £3m+ worth of shares
Overall, Wolsesley scores 16 out of 25, a middling result. The new management have rescued the company in a difficult environment, but the board composition is slightly deficient.
I've collated all my FTSE 100 boardroom verdicts on this summary page.
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> Tony owns shares in Imperial Tobacco and William Hill, but no other shares mentioned in this article.