As French enterprises worry increasingly
in the face of a difficult domestic market, it is highly tempting to favour
international strategies by relocating directors (or COMEX members) to regions where
the “business is growing”. The fact that this also allows directors to escape
taxation that is considered to be "excessive" definitely constitutes
an incentive but it cannot be the sole underlying reason behind a decision that
entails major consequences for any business enterprise.
Although in this day and age digital technologies
allow for videoconference-based management of teams spread across the globe, any
business enterprise must be anchored in a region, a country. Through this
anchoring, it adopts a specific culture, recognised values and a history that
enable it to grow into its
current form. Believing that a firm does not need this anchoring is a step that
some have already taken or that they are about to take without gauging its long-term
consequences.
What will happen a few years down the line
when new directors or members of the Board of Directors will be appointed from
several countries to jointly represent the enterprise’s stakeholders (shareholders,
employees, clients, etc.)? What will happen in the event of an attempted hostile
takeover or merger with a business not sharing the same values?
In the 80s, JP Morgan was recognised as an
American bank although it had more than 70% non-US directors... because the
Chairman was an American with board meetings being essentially held in the
United States.
Arcelor Mittal, Alcatel Lucent... So many enterprises
are now devoid of any anchor and can be offshored at any time at their
directors’ whim?
It is urgent to react and there still is
time. As shareholders, we can refuse that the offshoring of a CEO himself by
requesting a structure based on segregation of powers. This dual structure has
the advantage of allowing the executive director to relocate abroad in order to
accompany the growth of the enterprise while keeping the governance bodies (board
of directors and Chairman of the Board) in France in order to guarantee that
the firm will preserve keep its culture, its values and its national or
regional anchoring.
This local anchoring concept also rests on
issues pertaining to relationships with suppliers, the location of Research and
Development, the quality of university education, town and country planning… in
short, several impacts generated by large enterprises established in a region
or country.
It is in light of the above that all
shareholders should vote against the resolution proposing the merger of powers within
Schneider Electric and that they should ensure with all French companies that could
offshore their CEO that they should then propose a separation of the Chairman/CEO
powers in order to keep the governing bodies in France, where the company’s registered
office is located.
Olivier de Guerre, chairman of PhiTrust Active Investors
olivier.deguerre@phitrust.com
olivier.deguerre@phitrust.com
