What you need to know about the oil 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 Tullow Oil (LSE: TLW), the African-focussed oil group.
Here are the key directors:
|Simon Thompson||(non exec) Chairman|
|Aidan Heavey||Chief executive|
|Ian Springett||Finance director|
|Paul McDade||Chief operating officer|
|Angus McCoss||Exploration director|
|Graham Martin||General counsel|
Tullow Oil is a remarkable beast, a tiny oil company that has grown through a mixture of acquisitions and exploration success to be the fourth-largest constituent of the Oil & Gas sector in the FTSE 100. The firm was founded in 1985 by its current chief exec, Aidan Heavey, whose career is synonymous with the company's growth. A chartered accountant, he was financial controller of Irish airline Aer Lingus before setting up Tullow.
Simon Thompson became chairman on 1 January this year. A former director of Anglo American (LSE: AAL), his background combines investment banking and natural resources, especially in Africa, with previous roles at prestigious merchant banks NM Rothschilds and SG Warburg.
Finance Director Ian Springett is a BP (LSE: BP) man, having spent 23 years at the oil major in finance and commercial roles before joining Tullow as chief financial officer in 2008.
Chief operating officer Paul McDade, an engineer by training who joined the board in 2006, has been with Tullow since 2001 and previously held operational and management roles at Conoco, Lasmo and ERC. Exploration director Angus McCoss joined Tullow in 2006 after a career with Royal Dutch Shell (LSE: RDSB), which included substantial exploration experience.
It's unusual to see a general counsel on the board of a UK company. Graham Martin has been Tullow's principal legal advisor since its formation in 1985, firstly through law firm Dickinson Minto and subsequently oil and gas specialist Vinson & Elkins, before joining Tullow in 1997.
Tullow's board looks well-constructed, with its five non-execs bringing expertise from the worlds of oil and gas, banking, diplomacy and accounting.
Remuneration has been controversial. Large performance-related payouts have reflected the company's outstanding growth, but nearly half of shareholders voted against the company's generous long-term incentive plan last year.
The executives generally have large holdings, with Aidan Heavey's worth nearly £90 million, but slightly worryingly the CFO lets the side down.
I analyse management teams from five different angles to work out a verdict. Here's my assessment:
|1. Reputation. Management CVs and track record. Very good.||Score 4/5|
|2. Performance. Success at the company. Excellent over long-term.||Score 5/5|
|3. Board Composition. Skills, experience, balance. Well-balanced.||Score 4/5|
|4. Remuneration. Fairness of pay, link to performance. High.||Score 2/5|
|5. Directors' Holdings, compared to their pay. See above.||Score 4/5|
Overall, Tullow scores 19 out of 25, a high result which would have been up among the leaders but for the directors' remuneration and shareholdings.
I've collated all my FTSE 100 boardroom verdicts on this summary page.
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> Tony owns shares in Shell but no other shares mentioned in this article.