The Men Who Run Standard Chartered

Published in Company Comment on 9 August 2012

What you need to know about the bank’s top executives.

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 Standard Chartered (LSE: STAN). I've collated all my FTSE 100 boardroom verdicts on this summary page.

Here are Standard Chartered’s key directors:

DirectorPosition
Sir John Peace(non-exec) Chairman
Peter SandsChief Executive
Richard MeddingsFinance Director
Steve BertaminiExecutive Director
Jaspal BindraExecutive Director
Mike ReesExecutive Director
V. ShankarExecutive Director

Sir John Peace joined the board in 2007 and has been chairman since 2009. The former CEO of GUS from which FTSE 100 members Burberry (LSE: BRBY) and Experian (LSE: EXPN) were both spun off, he is also chairman of those two companies. That makes Sir John, who has no banking background, especially busy fronting the bank's fight back against allegations that it broke US sanctions against Iran.

A former McKinsey consultant, Peter Sands served as finance director from 2002, becoming CEO in 2006. He was recruited by former CEO Lord Mervyn Davies, and the two of them are the architects of the strategy that has made Standard Chartered so successful in recent years.

Richard Meddings is the one of the top three steeped in banking, joining the board in 2000 to becoming finance director in 2006.

Rescue Plan

Both Sands and Meddings have excellent reputations, with Sands tipped as a possible future Governor of the Bank of England and Meddings as possibly the next CEO of Barclays (LSE: BARC). Together they drew up a rescue plan for the banking sector that was adopted by Gordon Brown's government and became the blueprint for the bailouts of RBS (LSE: RBS) and Lloyds (LSE: LLOY).

Whether their reputations, and positions at Standard Chartered, remain intact remains to be seen.

The bank’s other executive directors have strong backgrounds in banking and finance. Ten non-execs include the former Prime Minister of South Korea and former HSBC (LSE: HSBA) finance director Richard Delbridge.

I analyse management teams from five different angles. Here's my assessment:

1. Reputation. Management CVs and track record.

All strong.
Score 3/5
2. Performance. Success at the company.

Made StanChart the safe and steady bank.
Score 4/5
3. Board Composition. Skills, experience, balance

Decent.
Score 3/5
4. Remuneration. Fairness of pay, link to performance.

Not excessive.
Score 3/5
5. Directors’ Holdings, compared to their pay.

Execs all have £1m in shares. Chairman negligible.
Score 3/5

Overall, Standard Chartered scores 16 out of 25, a very decent result. Standard Chartered was almost universally respected as a safe and sound bank which survived the financial crash without difficulty, had creditable ethics, and is focused on growth markets.

At first sight, its behaviour in regard to sanctions looks no different from several other banks that have quietly agreed fines. But Standard Chartered has encountered what happens when politics and business collide. That could be costly for the board and investors alike.

Buffett's favourite FTSE share

Let me finish by adding legendary investor Warren Buffett has always looked for impressive management teams when pinpointing which shares to buy. So I think it's important to tell you that the billionaire stock-picker has recently acquired a substantial stake in a prominent FTSE 100 company.

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.

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> Tony owns shares in Standard Chartered and HSBC but no other shares mentioned in this article. The Motley Fool owns shares in Standard Chartered.

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Comments

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snoekie 09 Aug 2012 , 4:04pm

More speculation about the share in the UK that Buffet invested in, Tescos I think, but the name is bandied about possibly liking a share, as a lure to buy. But that said, there is a nod to the fact that Buffet rarely strays outside the pool he has operated in for years and years. That makes sense, because he will have, almost by osmosis, absorbed huge chunks of info about events in his pool.

Any observer of the market will know his own pool pretty well having gleaned a huge amount of info without realising that he she was so doing.

May I suggest that Buffet's name be left out of a speculation, unless he in fact said or did something relative to the company the subject of the article.

snoekie 09 Aug 2012 , 4:13pm

As a PS, Tescos was operating in Buffet's pool for a number of years, so undoubtedly came to his attention in his meanderings around his pool.

ANuvver 10 Aug 2012 , 1:53pm

Thanks for the thoughts about Stanch.

It's a fascinating story. Wall St smears the City? Geopolitical sabre-rattling - is it about fundamentalism, sponsoring terrorism or refusing to be involved in dollar hegemony on oil? The fact that the alleged wire-stripping was possibly a direct result of the provisions put into the sanctions so that US banks wouldn't miss out on clearing business, despite the country's noble stance.

I gather they're not going after Goldman on a recent fraud allegation. Perhaps the EU should do so, on the basis that the great squid's creative accountancy saddled them with Greece? Mind you, they should probably be thanked for unintentionally unleashing financial devastation on the Gaddafi fortune.

Not much BTL discussion to be expected, I fear, as a result of more Buffety Neil SEO stuff.

goodlifer 12 Aug 2012 , 12:13pm

My only first-hand experience of Standard Chartered has been in Africa, where at least some of their operation involved changing hardish currencies like the pound and the dollar into and out of the local Mickey Mouse money.
I would imagine they also do much the same in Asia.

If that's an important part of their business it might hit them quite hard
if its US banking licence were revoked. .

Their boss has admitted they've "made mistakes."
Bankspeak for "committed a few crimes?"

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