The board of directors of Danone voted this Monday evening to separate the positions of chairman and general manager of the food giant, a defeat for Emmanuel Faber who will keep the presidency, and will only remain CEO until a new CEO is found.
Emmanuel Faber had been CEO since 2014 and CEO since 2017, and had faced a sling of shareholders for several weeks, who had notably demanded the separation of the two functions in order to restore new vigor to the group, battered by the pandemic of Covid-19.
A board meeting ruled Monday, and the information was announced by press release, more than three and a half hours after the meeting began.
The executive management of the group will therefore escape Emmanuel Faber, who as chairman of the board of directors will be in charge of strategic orientations.
“The process of selecting a general manager starts from now, it will take several months”, said a source close to the management.
2,000 job cuts
Two investment funds had made the departure of Emmanuel Faber a prerequisite for the recovery of the group’s performance, whose sales volumes have been eroding for several years, a movement aggravated by the health crisis.
These funds – which recently entered the capital thanks to the fall in the share – hit the nail on the head at the end of last week.
Artisan Partners, third shareholder with 3% of the capital, repeated that it found “Urgent to deal with the structure of the board and the management of the company” and demanded a change of direction for the “Reinvention” of Danone.
Danone is working on a global reorganization plan providing for up to 2,000 job cuts among its managers.
Artisan Partners said they wanted the appointment of a new chairman and a new managing director, with “Relevant external expertise”.
He was not entirely successful. The administrators rejected – unanimously, took care to specify the direction -, a proposal which consisted in interrupting Local First, the plan of global reorganization launched by Emmanuel Faber.
The activist fund Bluebell Capital Partners, based in London and more modest in scope, also asked that a managing director be sought outside Danone.
According to him, the shareholders of the group were “Massively” in favor of the separation of the functions of Chairman and Chief Executive Officer. He threatened to put the subject on the agenda of the next general assembly, at the end of April, if the board of directors did not take it up.
Boss known to defend a capitalism freed from short-termism, greener and more social, Emmanuel Faber was the first director of Danone not from the Riboud family.
Until now he had been content to say that he was not “Not dogmatic” on the dissociation of functions.
“I am really very happy that we have taken the governance arrangements already making it possible to anticipate the next phase in the development of this unique company that is Danone”, assured Emmanuel Faber, quoted in the press release.
Pledges to shareholders
The group seemed in any case anxious to show that it did not forget to pay its shareholders.
On February 19, during the presentation of the results, Emmanuel Faber announced that the compensation of Danone’s main executives, including his own, would henceforth be partly subordinated to the evolution of dividends and the share price.
And on Sunday, on the eve of the council meeting, the group announced that it would disengage from Chinese dairy giant Mengniu and that the fruits of the operation would be donated. “In their majority” to shareholders.
According to Danone, its stake in Mengniu is currently valued at 850 million euros.
Worried about seeing investment funds dictate the group’s strategy, several group unions (CFDT, FO and CGC) had given their support to the current governance.
“Whether it’s something, tartempion or contraption that manages the company, from the moment they apply the same policy that we have today, that suits us well. It is not the man we are defending, it is governance ”, declared Bruno Largillière, CFDT coordinator at Danone, while specifying that he prefers that Mr. Faber remains in place.
“We would not understand at all that it is called into question to bring more profit to the shareholders who arrive today, weigh only 3% and come to revolutionize the company”, he added.