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Depuis plus de dix ans, nous croyons que l’éthique du management et la gouvernance ont un rôle fondamental au sein des entreprises dans lesquelles nous investissons pour le compte de nos clients.
Face aux défis immenses de la crise que nous vivons aujourd’hui, nous sommes de plus en plus convaincus que nos entreprises cotées en Europe ont besoin d’actionnaires minoritaires actifs qui les aident à développer des stratégies innovantes pour répondre aux enjeux financiers, commerciaux et sociaux de notre monde actuel, et nous essayons d’y contribuer par notre stratégie d’investissement.

30 octobre 2015

Renault-Nissan: Could the separation of powers be a topic of discussion at last?

Following a vote by a meeting of Renault shareholders to introduce double voting rights, the media have echoed the state of dissension on Renault’s board of directors not to mention the tense discussions between the French government and Renault-Nissan CEO Carlos Ghosn. The comments made reflect the determination of Nissan and independent members of Renault’s board to ‘rebalance’ the cross-shareholding arrangement between Renault and Nissan if the government acquires double voting rights subsequent to its acquisition of an increased stake at Renault this year with a view to gaining such rights.

Even Emmanuel Macron, French Minister of the Economy, has made reference to the fact that ‘management was not the shareholder’, acknowledging publicly the risk of a significant shift in governance at Renault-Nissan. It is true that the governance structure in question is bewildering at best: Renault holds 43.4% of shareholders’ equity and voting rights in Nissan, while Nissan has a 15% stake in Renault without voting rights. Senior management at Renault have been asserting for years that Renault does not control Nissan and that the two are separate entities with a single CEO (a claim Renault has used to justify withholding Mr Ghosn’s salary information at Nissan until finally announcing plans to reveal details on the heels of a report from France’s AMF).

Mr Ghosn is indeed CEO of both Renault and Nissan, wielding all powers including within the Alliance (in the Netherlands), and the rotation of putative successors (departures of Carlos Tavares and his counterpart at Nissan) demonstrates clearly that he intends to stay on as sole director of the two corporations. This is hardly news in so far as when he was appointed chairman of Renault, assuming the position held by Louis Schweitzer, he became ‘Chairman of the Board’, a title not frequently used in France but clearly indicative of his state of mind.

The group’s size and the structure and alliance of the two corporations should lead their boards to provide for separation of powers with boards of directors headed by non-executive chairmen responsible for running their respective boards and overseeing senior management’s implementation of strategy. Management of shareholders is up to the board and chairman, hence the shareholder relationship between Renault and Nissan.

The mishmash of current approaches between operational (the Alliance) and main shareholder at Nissan (Renault) generates the confusion raised by Mr Macron between the board, which is supposed to represent shareholders, and the directors responsible for implementing the alliance strategy between the two corporations. This also does not address the issue of who will follow in Mr Ghosn’s footsteps, the succession process made all the more complicated by his role as head of two ‘independent’ companies.

Current discussions are logically focused on 2018, when Mr Ghosn will likely seek another term as CEO. The risks for both entities are very real in the event of failure by shareholders to renew his mandate or even his death or inability to govern (an unfortunate occurrence that has befallen numerous company heads). These are all valid reasons for calling on the board of Renault to adopt a new governance structure so that stakeholders can look forward to the future rather than fearing it.

The complexity of the legal framework between the two corporations (notably the arrangement between the Alliance and a Dutch foundation holding authority to prevent either company from seeking to take over the other) clearly does not leave much manoeuvring room in this confrontation arising from the long-time centralisation of power in the hands of one director... and this is clearly the issue underlying current discussions.

Olivier de Guerre