The Men Who Run Admiral Group

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 Admiral Group , the U.K.'s second-largest motor insurer.

Here are the key directors:



Alistair Lyons

(non-exec) Chairman

Henry Engelhardt

Chief Executive

Kevin Chidwick

Finance Director

David Stephens

Chief Operating Officer

Alistair Lyons has been chairman since 2000, a period of time which might bring his independence into question. He became chairman of FTSE 100 outsourcer Serco in 2010 and is also chairman of unlisted insurance company Towergate and deputy chairman of FTSE 250 housebuilder Bovis. A chartered accountant, he undertook finance roles in HP Bulmer, Asda and National & Provincial Building Society, before moving up to be CEO of National & Provincial in 1994.

An American, Henry Engelhardt was a founder director of Admiral in 1993. He has led the company through its management buyout in 1999, listing in 2004, and entry into the FTSE 100 in 2007. Prior to establishing Admiral he worked in the team creating Churchill Insurance, one of the pioneers of direct insurance sales in the U.K..

Mr Engelhardt owns 14% of Admiral, which puts him into Forbes' list of billionaires.

David Stevens was brought in as a co-founder of Admiral, having been a fellow student at INSEAD. Previously he was a graduate trainee at Cadbury and a consultant with McKinsey. He owns 4% of the company despite having gifted, along with his wife who was also a co-founder of the company, £100m-worth of shares to establish a charitable trust.

Finance director
Kevin Chidwick joined Admiral in 2005 as deputy finance director, taking over the finance director role from one of the firm's founders in 2006. A chartered accountant, he had previously worked exclusively in the financial services sector, including roles at Engage Mutual, Cigna U.K., and National Australia Bank. Some operational responsibilities have led to suggestions that he is being groomed as a future CEO.

Admiral's eight-strong team of non-execs look capable of holding management to account. There is a fair proportion of insurance sector executives, including the former CEO of Direct Line insurance and a former insurance sector finance director.

Below market remuneration
The two founder directors have below-market remuneration and no pension contribution. Engelhardt's £374 thousand total remuneration in 2012 must be the lowest of any CEO in the FTSE 100.

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

1. Reputation. Management CVs and track record.


Score 4/5

2. Performance. Success at the company.


Score 5/5

3. Board Composition. Skills, experience, balance

Strong. It might be time to change chairman.

Score 3/5

4. Remuneration. Fairness of pay, link to performance.


Score 4/5

5. Directors' Holdings, compared to their pay.

Non-founders have decent holdings too.

Score 4/5

Overall, Admiral scores 20 out of 25, a good result. Admiral's founder directors have made the company the success story it is, while a relatively newer FD and a strong non-exec team provide external perspective.

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

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Legendary investor Warren Buffett has always looked for impressive management teams when picking stocks. His recent acquisition, Heinz, has long had a reputation for strong management. Indeed Buffett praised its "excellent management" alongside its high quality products and continuous innovation.

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Tony does not own any shares mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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