What you need to know about the telecoms group'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. 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 (UKX). I hope to separate the management teams that are worth following from those that are not. Today I am looking at Vodafone (LSE: VOD) (NYSE: VOD.US), the FTSE’s third largest constituent.
Here are the key directors:
|Gerard Kleisterlee||(non-exec) Chairman|
|Vittorio Colao||Chief Executive|
|Andy Halford||Finance Director|
|Stephen Pusey||Chief Technology Officer|
There is a distinctly continental air at the top of Vodafone. Gerard Kleisterlee, who was appointed chairman last year, spent his entire executive career at Dutch electronics giant Philips. He served as CEO of that company from 2001 to 2011 and is widely credited with streamlining the company in response to the growth of Asian competitors.
Vittorio Colao became CEO in July 2008 but has worked on and off for parts of Vodafone or its predecessors since 1996. In his early career he was a McKinsey consultant. He has largely eschewed the strategy of growth by acquisition pursued by his predecessors, and has streamlined the group with sales of some minority interests. However he secured a bargain in the £1bn acquisition of Cable & Wireless Worldwide after its management had lost the confidence of the market.
Snr Colao is seen as a strong operational manager, and Vodafone shares have outperformed rivals such as BT (LSE: BT.A) during his tenure, especially in terms of total return. That was rewarded in the doubling of his total pay package to £14 million this year, which was nevertheless overwhelmingly supported by shareholders.
A career finance man, Andy Halford joined the board in 2005 having worked at Vodafone since 1999. He has previously been chief financial officer of Vodafone's US associate Verizon Wireless, which no doubt comes in handy when the vital and sensitive subject of the latter's dividend policy is discussed.
Stephen Pusey’s career was spent with British Telecom and Nortel prior to joining Vodafone in 2006 and the board in 2009. It is encouraging to see someone on the board who understands the nuts and bolts and wires of Vodafone's technology. However the company has not replaced the well respected head of its European operations, Michel Combes, who left in July.
Vodafone's eight non-execs have a broad mix of IT, business, finance and accounting backgrounds.
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.|
Better than peers.
|3. Board Composition. Skills, experience, balance|
|4. Remuneration. Fairness of pay, link to performance.|
High but acceptable.
|5. Directors’ Holdings, compared to their pay.|
Overall, Vodafone scores 19 out of 25, a strong result putting it amongst the top of companies that I have looked at so far. You can see all my FTSE 100 boardroom verdicts on this summary page.
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> Tony owns shares in Vodafone but no other shares mentioned in this article.