What you need to know about the gold miner'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 Randgold Resources (LSE: RRS) (NASDAQ: GOLD.US), the only gold miner in the FTSE 100.
Here are the key directors:
|Philippe Liétard||(non-exec) Chairman|
|D Mark Bristow||Chief Executive|
|Graham Shuttleworth||Finance Director|
Philippe Liétard joined the board in 1998 and became chairman in 2004, stepping in to replace the previous chairman who was then facing fraud charges. Formerly a corporate and project financier with UBS, M. Liétard spent much of his career with the World Bank and IFC, mainly in the minerals business in Africa. That gives him excellent credentials and contacts to smooth Randgold’s relations in Africa where all its mines are located, notably in Mali which was recently subject to a military coup.
A geologist by training and a former South African Army officer, Mark Bristow has been CEO of Randgold since its incorporation in 1995. His name is synonymous with the company which was listed in 1997 with a market value of £100m and has since grown into a £7bn company. He completed a 6,500 mile motorbike ride in support of African charities earlier this year, and has been closely associated with the development of the mining industry in Africa.
A chartered accountant, Graham Shuttleworth joined the board as finance director in 2007. Prior to that he was head of metals and mining in the Americas for HSBC (LSE: HSBA). He was part of Randgold’s management team when it listed in 1997 and has also been involved with the company as an adviser.
Randgold’s five non-execs predominantly have backgrounds in mining and banking, with impressive-looking CVs. They appear to be based on at least three different continents, in part a consequence of Randgold’s offshore Channel Island domicile, but which must hamper informal communication between the (exclusively male) board members somewhat.
Randgold executives are required to hold company shares worth at least twice their base salary, but they substantially exceed this with Mark Bristow’s holding valued at £56 million. It's good to see a chairman with a substantial (£2.7m) holding, something of a rarity in the FTSE 100.
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.|
CEO very well regarded.
|2. Performance. Success at the company.|
Company has outperformed.
|3. Board Composition. Skills, experience, balance|
|4. Remuneration. Fairness of pay, link to performance.|
Generous but performance-related.
|5. Directors’ Holdings, compared to their pay.|
Overall, Randgold Resources scores 20 out of 25, an excellent result. The management team, including the chairman, are experienced and impressive.
I've collated all my FTSE 100 boardroom verdicts on this summary page. I hope it helps with your analysis.
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> Tony owns shares in HSBC but no other shares mentioned in this article.