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 Lloyds Banking (LSE: LLOY) (NYSE: LYG.US), the high street bank that is 40% owned by the UK government.
Here are the key directors:
|Sir Winifred (Win) Bischoff||(non-exec) Chairman|
|Antonio Horta-Osorio||Chief Executive|
|George Culmer||Finance Director|
None of the men who ran Lloyds bank four years ago run it now. The directors who backed Lloyds' disastrous acquisition of HBOS which forced it to accept a government bail-out have all been cleared out. But on his appointment in 2009 chairman Win Bischoff strongly backed the previous CEO Eric Daniels, the co-architect of the HBOS deal who was finally ousted in 2011 but collected a fat consultancy fee for doing nothing for six months.
Sir Win is a City grandee and former investment banker who spent much of his career with Schroders (LSE: SDR), and subsequently Citibank (NYSE: C.US) after it acquired Schroders' investment banking business. He was chairman of Citibank from 2007 to 2009.
Antonio Horta-Osorio was plucked from his role as CEO of Santander's (NYSE: SAN.US) UK subsidiary to become CEO in March 2011, swiftly replacing much of the top management at Lloyds with colleagues from Santander. Known as a hands-on, details manager, in November 2011 he suffered work-related stress and was absent from his desk for six weeks. The board agreed to lighten his workload on his return, though unsurprisingly did not lighten his remuneration.
Finance director George Culmer joined the board in May this year after the previous incumbent abruptly departed to join insurer Resolution (LSE: RSL). A chartered accountant, he has previously worked in the insurance industry, latterly being FD of RSA Insurance (LSE: RSA). He was given £2 million worth of shares to buy out his deferred bonus.
The eight non-execs have an impressive mix of banking, finance and business experience.
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.|
Shares have moderately underperformed sector.
|3. Board Composition. Skills, experience, balance|
|4. Remuneration. Fairness of pay, link to performance.|
In line with sector.
|5. Directors' Holdings, compared to their pay.|
Low compared to remuneration.
Overall, Lloyds scores 12 out of 25, a poor result. The jury is still out on whether Snr Horta-Osorio is up to the job.
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
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.
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.