The recent debate
surrounding the corporate governance of EADS has proved how hard it is to
reconcile the interests of its various partners, particularly as the countries
involved (Germany, France and Spain) can’t afford to reduce their
dependence on a group whose activity is central to their defence policies. And the
recent organisational decisions of policymakers reveal how difficult it is to
reconcile their points of view, an issue further complicated by the specific
governance of EADS due to its legal status as a Dutch listed company.
The group’s
current governance has shown cracks in the plasterwork with regard to its
imposed choice of non-executive chairman (who hasn’t exactly proved his mettle)
and an industrial project steered by operations directors who have opted for
complex organisation involving new country partnerships without having
consulted its existing partners about the possibility of such an arrangement.
Notwithstanding,
for a number of years we have been plying the directors of EADS with questions
that have remained unheeded concerning the possibility of an alternative
approach that would reconcile the interests of the various stakeholders: rather
than keeping EADS as a listed company, with all the complexity that entails, in
order to avoid this key part of Europe’s defence industrial base falling into
non-European hands, why not take it off the stock market and replace it with
its subsidiary, AIRBUS?
This solution has
a number of advantages: it would pave the way for the listing of AIRBUS, whose
market positioning and outlook would immediately draw investors, whilst
allowing EADS to stay in the game as majority or minority shareholder with
responsibility for managing the subsidiary whilst allowing manufacturing
companies operating in key growth regions to enter the capital and take part in
governance. For example, it would be easier to involve Chinese companies in the
governance of AIRBUS than that of EADS.
Another major
advantage of this arrangement would be the restoration of control over EADS’s
capital and governance and its military strategy to European countries. By bringing
together European investors in the framework of a non-listed company, EADS would
be well placed to satisfy the essential requirements of its special status as a
component of Europe’s defence industrial base.
It is impossible to reconcile this status with the possibility that, if it were
to remain a listed company, it might one day fall into the hands of external
investors or shareholders, a scenario that would of necessity trigger a series
of legal contortions in order to bring about “apparent control”, without openly
admitting it.
The system we are
proposing would also clarify each stakeholder’s role in terms of strategic
choices, with management able to take a more detached and discerning stance
owing to the fact that the transparency criteria are not the same for listed
and non-listed companies.
Finally, our
proposal would enable the separation of business activities that international
socially responsible investors are finding it hard to keep in their portfolios,
although they are long-term investors, and would save the three European states
concerned from an awkward predicament if EADS became the target of a hostile takeover
bid.
This appears to us
to be the most rational course of action, and as such it should be at the core
of all current debate on the issue, rather than the discussion that is actually
taking place, which smacks more of marketplace haggling.
Olivier de Guerre
Chairman of PhiTrust
Active Investors
