French dairy giant Danone will appoint a new CEO after splitting Emmanuel Faber’s current chair and CEO role following pressure from investors.
Danone’s board agreed to measures yesterday to split the roles, which will be effective upon the appointment of a new CEO.
The process to recruit a new CEO has been launched and once complete, Faber will focus on his role as non-executive Chairman.
In the meantime, he will continue as chairman and CEO “with the full confidence and unanimous support of the board to exercise full operational responsibility for the company, and to lead the implementation of the adaptation plan Local First”.
The move comes after pressure for a management shake-up from a number of activist investors after Danone has suffered weak sales growth through slowing yoghurt sales and a slump in bottled water during the coronavirus crisis.
Bluebell Capital Partners, one of the shareholders urging structural change, welcomed the news and called for the appointment of an external CEO.
Bluebell Chief Investment Officer Giuseppe Bivona commented: ““There should be an outside candidate, somebody who is not connected to the past. It’s good to split the role of chairman and CEO, but obviously what we want, what the company deserves, is an independent chairman, which clearly is not going to be the case.”
Investment bank Bernstein cautioned whether the move represented “a clean break”.
It cautioned the move could lead to either a CEO-in-name-only who executes the Chairman’s plans, or a repeat of this tense stand-off with shareholders a few years from now.
A Bernstein note read: “Things are moving fast at Danone. We think growth cannot be rejuvenated by another wave of cost cutting, but by material investments in the brands and innovation.”
Broker Barclay’s commented: “We think it is time for a new CEO to bring fresh energy and a complete focus on day to day execution. Ultimately it will come down to the quality of the CEO candidate chosen.
“For shareholders to really get the feeling there is a real change here, most would probably prefer an external (non-French) candidate. If the candidate is allowed full scope to shape the portfolio to unlock the trapped value in the business this would clearly be a good thing but a pre-requisite would be to buy into the recently announced ‘Local First’ strategy which is Danone’s biggest restructuring programme.”
At the same time Danone has decided to appoint Gilles Schnepp as vice-chairman, together with Cécile Cabanis, and to entrust with immediate effect the responsibilities of lead independent director and chairman of the governance committee to Jean-Michel Severino.
Commenting changes Faber said: “I am pleased we took the governance arrangements that will allow us to anticipate the next phase of development of the truly unique company Danone is, as we open, with our Local First plan, a new step towards the company’s reinvention.
“I want to thank all our shareholders, my colleagues of the Board, our employees and social partners who contributed to making these decisions emerge. I am convinced they will make the execution of our plan and our mission much stronger.”