Qualities of a good management?

I want to know from my fellow members what they think about the qualities that are required by a good management. Since these are the guys that are managing the company in turn managing our money which we have invested, I think this criteria is one of the most important while investing.

I personally believe good dividend track record can be one of the criteria in having a minority shareholder friendly management. Kindly suggest according to your opinion what are the qualities that make a good management.

 

I believe the following traits should be associated with good management:

1. Good credentials (experience in the field, good education which will help them understand the industry and the scenario in India and the world).
2. Vision (Very important that the company's management should understand the vision and goals and work towards that goal)
3. Past performance and delivery (how the management has grown the company over a period of time)
4. No previous irregularities/fraud cases
5. Keen on performance based work (focus on changing on things which aren't working and adding brilliant people on the team)
6. Addressing minority shareholder's concerns (generally an icing on the cake, but many a times the focus is solely on business).

 

10 key aspects from my end:

1. Must have a fire in their belly to be the number 1 in their field.
2. Transperancy in dealing.
3. Strong credentials - they should be hands on in each and every aspect of their business.
4. Leading a professional organisation, they need to ensure that all (if any) family disputes should not hit the business.
5. They can run (grow) fast, however should not jump - else they may break some bones.
6. They must have strong vision on passion to grow and expand. They should expand and venture in non related core business only if there are compelling reasons and there is no room for them to grow in their core / related business.
7. Shareholder friendly approach - not necessarily they need to distribute free bonus shares.
8. Not pledge their personal holding for personal uses.
9. Should not drain all the earnings as Dividends (they being the major share holders will get the biggest pie) enabling them to use it for personal usage.
10. Ensure fair practise in alloting share / warrants to themselves.

Cheers,
Bhavesh.

 

They say you learn the hard way. Stuck in relinfra and rel cap from ages. The very first quality of a good management is how they look at corporate governance. Second is their outlook and regard to the shareholders who hand over their hard earned money to these people. The above three boarders have so aptly listed out the other qualities. Oh yes Videocon industries also taught me lessons in long term investing.

 

Evaluating A Company's Management ( source : Investopedia.com)

By Investopedia Staff

Most investors realize that it's important for a company to have a good management team. The problem is that evaluating management is difficult . It's clear that investors can't always be sure of a company by only poring over financial statements. Fallouts such as Enron, Worldcom and Imclone have demonstrated the importance of emphasizing the qualitative aspects of a company. There is no magic formula for evaluating management, but there are factors to which you should pay attention. In this article we'll discuss some of these signs.

1. The Job of Management
A strong management is the backbone of any successful company. This is not to say that employees are not also important, but it is management that ultimately makes the strategic decisions. You can think of management as the captain of a ship. While not physically driving the boat, he or she directs others to look after all the factors that ensure a safe trip.

2.Stock Price Isn't Always a Reflection of Good Management

3.Length of Tenure
One good indicator is how long the CEO and top management has been serving the company. A great example is General Electric whose former CEO, Jack Welch, was with the company for around 20 years before he retired. Many herald him as being one of the best managers of all time.

Warren Buffett has also talked about Berkshire Hathaway's superb record of management retention. One of Buffett's investment criteria is to look for solid stable managements that stick with their companies for the long term.

4.Strategy and Goals

5.Insider Buying and Stock Buybacks

6.Compensation
High-level executives pull in six or seven figures per year, and rightly so. Good management pays for itself time and time again by increasing shareholder value. But knowing what level of compensation is too high is a difficult thing to determine.

One thing to consider is that managements in different industries take in different amounts. For example, CEOs in the banking industry take in more than $20 million per year, whereas a CEO of a retail or food service company may only make $1 million. As a general rule you want to make sure that CEOs in the same industries have similar compensation.

7.You can't talk about compensation without mentioning stock options.

8.As with stock ownership, look to see whether management is using options as a way to get rich or if it is actually tied to increasing value over the long run. You can sometimes find this in the notes to the financial statements. (For more on this, see Footnotes: Start Reading The Fine Print.)

If not, take a look in the EDGAR database for a Form 14A. The 14A will list among other factors background information on the managers, their compensation (including options grants) and inside ownership.

9.get Out of Debt – Start Making Money
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Source :
https://www.investopedia.com/articles/02/062602.asp