The Men Who Run British American Tobacco

LONDON -- 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 British American Tobacco (ISE: BATS.L) (NYS: BTI) , the world's second-largest quoted tobacco company.

The key directors are:



Richard Burrows

Nonexecutive chairman

Nicandro Durante


Ben Stevens

Finance director

John Daly


Richard Burrows joined the board and became chairman in late 2009. His executive career was spent with Pernod Ricard subsidiary Irish Distillers, where he was CEO from 1978 to 2000, after which he served as deputy chief executive of Pernod Ricard itself until 2005.

However, his appointment to BATS was controversial, as during the period from 2005 to 2009 he was governor (chairman) of the Bank of Ireland, apologizing to shareholders on his resignation for the near-total collapse in value of their shares when the bank had to be rescued by the Irish government. One of BATS's top shareholders, Standard Life, publicly expressed disquiet.

Hardly shy of controversy, he has recently become a nonexecutive director of FTSE 100 miner Eurasian Natural Resources Corp as it struggles to shed its abysmal corporate-governance record.

In contrast, Nicandro Durante eased smoothly into the post of CEO in March 2011, having previously served as chief operating officer from 2008. He had joined the Brazilian subsidiary of BATS in 1981, working in various finance and regional management roles. As CEO, he has continued his predecessor's strategy of growth in developing markets and emphasis on productivity and shareholder value.

Ben Stevens joined BATS in 1990 and has performed a variety of finance, marketing, and management roles, becoming finance director in 2008. With a background in marketing, chief operating officer John Daly spent 14 years in the pharmaceutical industry before joining Rothmans (now part of BATS) in 1994. He served in various marketing and management roles before taking up his current position in 2010.

There are eight nonexecs on the board with a broad spectrum of experience.

I analyze management teams from five different angles to help work out a verdict. Here's my assessment:



Score (out of 5)

Reputation: Management CVs and track record

Chairman is controversial.


Performance: Success at the company



Board composition: Skills, experience, and balance

See below.


Remuneration: Fairness of pay and link to performance



Directors' holdings: Compared to their pay

Executives have 2 million pounds to 7 million pounds


Overall, BATS scores 17 out of 25 -- one of the better FTSE 100 management teams. Management oversight is a critical issue, as the three executives are long-term BATS employees and the financial director is not from the profession. The weight of numbers of nonexecs helps, but the chairman's reputation isn't unblemished.

I've collated all my FTSE 100 boardroom verdicts on this summary page. I hope it will help with your analysis.

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