The Men and Women Who Run Pearson

Published in Company Comment on 5 October 2012

What you need to know about the media 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. 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 Pearson (LSE: PSON) (NYSE: PSO.US), where Dame Marjorie Scardino has just announced she is standing down as CEO after 16 years.

Here are the key directors:

Glen Moreno(non-exec) Chairman
Dame Marjorie ScardinoChief Executive (until 31/12/12)
John FallonChief Executive (from 01/01/13)
Robin FreestoneChief Financial Officer
Will EthridgeChief Executive, North American Education
Rona FairheadChief Executive, Financial Times group
John MakinsonChief Executive, Penguin Group

Dame Marjorie is, currently, one of just four women who run FTSE 100 companies. During her tenure she has reshaped Pearson, shedding such diverse assets such as Madame Tussauds and Lazards, and leading a thrust into the US education market. She tripled sales and profits, and is a hard act to follow.

The possible sale of the FT and/or Penguin is subject to permanent speculation, whilst at the same time the company has a substantial cash pile which could be used for acquisitions. Dame Marjorie hinted that the big strategic decisions facing the company were factors behind the timing of the hand over.


John Fallon was previously chief executive of Pearson’s international (i.e. non-North American) education division, which is a major growth engine targeting emerging markets but includes the UK’s somewhat controversial exam board Edexcel. He joined Pearson in 1997 as director of communications, and has a corporate affairs and communications background – unusual for a FTSE 100 CEO.

A former Citigroup investment banker and CEO of Fidelity, Glen Moreno was appointed chairman in 2005. He has since served as acting chairman of UK Financial Investments, the government’s bank holding company, and as deputy chairman of Lloyds Banking (LSE: LLOY).

Robin Freestone joined Pearson as deputy CFO in 2004 becoming CFO in 2006. He is a career finance professional who sits on the ICAEW’s Financial Reporting Committee and is deputy chairman of the Hundred Group of FTSE 100 finance directors.

The three divisional CEOs have strong CVs, particularly Rona Fairhead who was formerly Pearson’s CFO and who sits on the board of HSBC (LSE: HSBA), chairing its risk committee. However it must be rather strange in the boardroom at times, with two of the divisions potentially up for sale.

Pearson’s impressive non-execs include a former CEO of Unilever (LSE: ULVR) and finance director of Vodafone (LSE: VOD). However numerically they do not outnumber the chairman plus executives.

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.

Score 4/5
2. Performance. Success at the company.

Score 4/5
3. Board Composition. Skills, experience, balance

Great balance.
Score 4/5
4. Remuneration. Fairness of pay, link to performance.

Expensive board.
Score 3/5
5. Directors’ Holdings, compared to their pay.

Execs have very substantial holdings.
Score 5/5

Overall, Pearson scores 20 out of 25, a very good result bearing in mind the change of leadership.

I've collated all my FTSE 100 boardroom verdicts on this summary page.

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> Tony owns shares in Unilever, Vodafone and HSBC but no other shares mentioned in this article. The Motley Fool has recommended shares in Unilever.

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UncleEbenezer 06 Oct 2012 , 12:13am

Seems it's always "The men who run ..." or "The men and women who run ...". In Pearson's case, shouldn't it be "The women and men who run ..."?

FWIW when I contracted for Pearson my client was a woman, as was her boss, and her replacement when she made an internal move. Though my main technical contact was male. All of them very competent people.

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