The Men Who Run ITV

Published in Company Comment on 30 November 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 ITV (LSE: ITV), the UK’s largest commercial television network which is 2 years into a 5-year turnaround plan.

Here are the key directors:

DirectorPosition
Archie Norman(non-exec) Chairman
Adam CrozierChief Executive
Ian GriffithsFinance Director

For a £2.8bn company in the lower reaches of the FTSE 100, ITV has an impressively well-known board.

The company’s shares rose 5% on the day Archie Norman’s appointment as chairman was announced, a position he took up on 1st January 2010, replacing executive chairman Michael Grade who had started ITV’s turnaround. A former McKinsey consultant, Archie Norman was finance director of Kingfisher at 32 but is best known for turning around supermarket group ASDA before selling it to Walmart.

He subsequently served as a Conservative MP for five years and was Chief Executive of the Tory Party and a shadow minister. He now has a portfolio of directorships and advisory roles.

Football Association

Mr Norman moved swiftly to fill the vacant CEO post with the appointment of Adam Crozier in April 2010. He had risen through the ranks of advertising agency Saachi and Saachi before being a surprise appointment as CEO of the Football Association in 2000, where his restructuring lowered the average age of its employees from 55 to 32.

He left the FA in 2002 to be CEO of loss making Royal Mail where he transformed operating profits with ruthless closures and cost-cutting. However the turnaround was incomplete when he left to take up the ITV job, and his critics question whether he will stay the course to fully implement his five-year turnaround plan for ITV.

So far that plan of replacing senior management, cost-cutting, and reducing dependency on advertising revenue by investing in content, pay-TV and the internet is paying off well. Profits and dividends have been restored and the balance sheet repaired.

Discipline

Some of that improvement in cost discipline had started after Ian Griffiths was appointed finance director in 2009. He joined from media group Emap where he was finance director from 2005 to 2008, having joined the company in 1994 after a period in the accounting profession.

ITV’s weighty non-execs include Andy Haste, who as CEO of RSA Insurance was credited with turning it around, Tesco's long-serving corporate affairs director Lucy Neville-Rolfe, the former CEO of BAA and HM Revenue and Customs, and the former CEO of EMI.

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.

Top notch.
Score 5/5
2. Performance. Success at the company.

Excellent so far.
Score 5/5
3. Board Composition. Skills, experience, balance

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

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

Crozier has less that 20% of his 2011 cash remuneration in shares.
Score 2/5

Overall, ITV scores 19 out of 25, a very strong result let down by the lack of cash commitment on the part of the CEO responsible for the company’s turnaround plan. Shareholders will be hoping he stays the course to deliver on the plan.

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

Buffett's favourite FTSE share

Let me finish by adding that 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.

Tony owns shares in Tesco, but no other shares mentioned in this article.

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

theRealGrinch 30 Nov 2012 , 6:03pm

Top team and Archie Norman is an excellent business leader and top guy from personal experience with him.

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