What you need to know about the top executives of Bunzl plc (LON: BNZL), the specialist distributor.
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. I hope to separate the management teams that are worth following from those that are not. Today I am looking at Bunzl (LSE: BNZL), the 'one-stop shop' distributor of low value products from coffee cups to cleaning fluid.
Here are the key directors:
|Philip Rogerson||(non-exec) Chairman|
|Michael Roney||Chief Executive|
|Brian May||Finance Director|
|Pat Larmon||CEO, North America|
Philip Rogerson has been chairman since March 2010. Although he gave up one chairmanship and another non-executive position to clear his diary for the role, he remains chairman of another FTSE 100 company, Aggreko, and of FTSE 250 member Carillon.
His executive career was spent at ICI, and then British Gas where he served as finance director and as a divisional director, before overseeing the demerger of Centrica as deputy chairman.
Growth by acquisition
Michael Roney became CEO in 2005, shortly after Filtrona was spun off from the company leaving Bunzl as the distribution group it is today. He had been a non-executive since 2003, and as he stepped into the CEO role the former CEO, who had overseen Bunzl's divestment of a swathe of businesses over a 14 year period, moved up to chairman. That would be frowned upon in today's corporate governance climate, but makes for continuity.
An American, Mr Roney worked for Goodyear in various roles before joining Bunzl, including being CEO of the Asian and European divisions. With Bunzl already focussed on distribution, Mr Rooney has led its growth by acquisition, rolling out specific market niches globally, with over 60 acquisitions completed. Revenues, operating profit and EPS have grown in each year under his leadership, and the shares have increased by 150%.
Brian May has been finance director for most of Mr Roney's tenure, taking up that role in 2006. A chartered accountant, he joined Bunzl from KPMG in 1993 and rose through the finance ranks. North American CEO Pat Larmon has also been with the company for a long period. He joined in 1990 when Bunzl took over a company he owned, and rose through the group to his current position in 2004.
Bunzl has six non-execs, with two new directors joining this year. They have credible and relevant experience with a bias towards distribution and retailing CVs. The company has a policy requiring executives holding shares worth at least their annual base salary.
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.|
|3. Board Composition. Skills, experience, balance|
Sensible, though chairman has another FTSE 100 role.
|4. Remuneration. Fairness of pay, link to performance.|
|5. Directors’ Holdings, compared to their pay.|
CEO has £4m-worth, other executives £1.5m
Overall, Bunzl scores 19 out of 25, a good result. Typical of smaller FTSE 100 companies, there's a tradition of internal promotion to the board, and the CEO is relatively long-serving. Results over that period speak for themselves.
I've collated all my FTSE 100 boardroom verdicts on this summary page.
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> Tony owns shares in Centrica, but no other shares mentioned in this article. The Motley Fool has recommended Aggreko and Filtrona.