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 Travis Perkins (LSE: TPK), the largest supplier of building materials in the UK and owner of Wickes DIY chain.
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Here are the key directors:
| Director | Position |
|---|---|
| Robert Walker | (non exec) Chairman |
| Geoff Cooper | Chief executive |
| John Carter | Deputy chief executive |
| Tony Buffin | Finance director |
Robert Walker has been chairman since 2010. His executive career included 20 years with Pepsi Co, and time with management consultants McKinsey and Proctor and Gamble, as well as being a former CEO of Severn Trent. He has since held a slew of FTSE 350 directorships, and is also chairman of FTSE 250 pub operator Enterprise Inns.
CEO retiring
Geoff Copper joined the company and became CEO in 2005. A chartered management accountant, he had a career in management consultancy before moving into finance director roles, with Gateway and Alliance Unichem, where he became deputy CEO. Mr Cooper is to retire early next year, staying on for 12 months as a consultant.
He is to be replaced by John Carter, who has served as deputy CEO since 2012. Mr Carter joined the group as a management trainee in 1978 and has worked his way up through various management and commercial roles, becoming chief operating officer in 2005 when Mr Cooper joined.
During the combined tenure of Mr Cooper as CEO and Mr Carter as COO/deputy CEO, which included the depths of the financial crisis, turnover more than doubled as the company grew market share through acquisitions, whilst pre-tax profits rose 50% and market cap doubled. The company joined the FTSE 100 earlier this year.
Overseas expansion?
A chartered accountant, Tony Buffin was appointed finance director in April this year, replacing the previous incumbent who had served for 17 years. He was previously finance director of Australian retailer Coles Group and financial controller of Boots Group. There was some speculation on his appointment that his international and corporate finance experience might indicate plans for overseas expansion.
Travis Perkins’ four non-execs combine retail, construction materials and finance experience. Though they are matched in number by the chairman plus executives, the retirement of the CEO and elevation of his deputy will presumably see them assume the majority.
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. Strong. |
Score 4/5 |
| 2. Performance. Success at the company. Good. |
Score 3/5 |
| 3. Board Composition. Skills, experience, balance Logical. |
Score 3/5 |
| 4. Remuneration. Fairness of pay, link to performance. Uncontroversial. |
Score 3/5 |
| 5. Directors’ Holdings, compared to their pay. Chairman and older CEOs have £1m+ worth. |
Score 4/5 |
Overall, Travis Perkins scores 17 out of 25, an above-average result. A new top team is relatively untested, but the company is carefully blending continuity with external recruitment.
I’ve collated all my FTSE 100 boardroom verdicts on this summary page. I hope it helps with your analysis.
Buffett’s favourite FTSE share
Legendary investor Warren Buffett has always looked for impressive management teams when picking stocks. His recent acquisition, Heinz, has long had a reputation for strong management. Indeed Mr Buffett praised its “excellent management” alongside its high quality products and continuous innovation.
So I think it’s important to tell you about the FTSE 100 company in which the billionaire stock-picker has a substantial stake. A special free report from The Motley Fool — “The One UK Share Warren Buffett Loves” — explains Mr Buffett’s purchase and investing logic in full.
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.
