What you need to know about the security group's top executives.
FTSE100 (UKX) executives are dropping like flies. Now G4S (LSE: GFS) is in the news for all the wrong reasons, after the company failed to train enough guards for the London Olympics.
G4S will lose up to £50m directly, but the reputational damage will harm future business. As I write, CEO Nick Buckles is hanging onto his job by a thread.
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. On the other hand, 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. I hope to separate the management teams that are worth following from those that are not. I've collated all my FTSE 100 boardroom verdicts on this summary page.
This is G4S's top team:
(non exec) Chairman
COO and Regional CEO-Americas
John Connolly has only been in post since last month, after the previous chairman fell on his sword following G4S's failed £5bn bid for Danish cleaning services company ISS.
He spent his career with Deloitte, acting as global chairman from 2007 to 2011, and played a key role in the firm's growth. he is also chairman of FTSE 100 oil services group AMEC (LSE: AMEC). Though new to G4S, Connolly brings credibility.
Nick Buckles has been CEO since 2005. He has spent most of his career with G4S and its predecessor company Securicor, and can take much of the credit for the group's growth organically and by acquisition. He has led it through over 70 acquisitions, taking G4S from number 3 to number 1 in the global securities business, and becoming Europe's largest employer in the process.
The proposed acquisition of ISS dented his reputation. Shareholders objected to the size of the deal and the move into lower margin cleaning services, as well as the proposed equity dilution.
There is now the question of whether he will take the fall for the Olympics debacle. The chairman is too new to go, and being such an important contract the argument is that the CEO should take the blame. But his departure would be a loss to shareholders.
Trevor Dighton is a professional accountant who has spent 17 years with the group, the last 8 as CFO. COO Grahame Gibson has been with the group for 29 years and on the board for 7.
There are 6 non-executive directors who bring relevant experience and contacts, including former Metropolitan Police Commissioner Lord Condon and Ofgas director general Claire Spottiswoode.
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.
Connoly sound but new. Executives all long time insiders.
2. Performance. Success at the company.
Two bad episodes mar a successful record.
3. Board Composition. Skills, experience, balance
Good for contacts, light on control.
4. Remuneration. Fairness of pay, link to performance.
Performance related remuneration with stretch targets. First FTSE 100 group to introduce claw-backs.
5. Directors' Holdings, compared to their pay.
Exec directors have substantial shareholdings.
G4S scores 16 out of 25, a decent if average result. But any more fallout from the Olympics contract would likely see Buckles go, and that would knock a couple of points off the score.
Let me finish off by adding that legendary investor Warren Buffett has always looked for impressive management teams when pinpointing which shares he should buy. So I think it's important to tell you that the billionaire stock-picker has recently acquired a substantial stake in a prominent UK blue chip. Buffett's investment decision is covered in full within this special report -- but hurry, The One UK Share Warren Buffett Loves is free for a limited time only.
Are you a sophisticated investor hoping to profit from this uncertain economy? We urge you to read "10 Steps To Making A Million In The Market" today -- your wealth could be transformed. Click here now to request your free, no-obligation copy. The Motley Fool is helping Britain invest. Better.
Further Motley Fool investment opportunities:
> Tony does not own any shares mentioned in this article.