Danone, Bouygues and LVMH, three
CAC 40 companies, have announced that they will recommend their shareholders
appoint Clara Gaymard (former CEO of General Electric Europe) to their Boards
of Directors. The appointments would make her a director of four French listed
companies since she is already a Veolia director. This isn't counting the other
positions she holds in a family foundation and in the endowment fund of the
RAISE investment fund.
It's true that her career and experience are of great
interest to large companies. The time she has spent in public service and at
major corporations like General Electric Europe has been remarkable in many
respects and has been noticed. And given that all major listed companies are
currently seeking women to meet diversity quotas...
However, is it reasonable to accept four directorships
and, probably, positions on board committees in the near future? All the more
so given that, for many years now, the directors of major listed companies have
stated that their workloads are becoming heavier and heavier. This is due to
the time required to fully understand company challenges and the issues on
which they have to decide, as well as the increasingly voluminous documents
they must read before board meetings.
The codes of governance of large institutional
investors recommend that the number of mandates of non-executive directors be
limited. This is because the former have noticed that some directors
"accumulate mandates" and no longer have enough time to take a step
back to assist the companies in which they hold a position.
A director mandate requires time and availability...
Moreover, the General Meetings of Veolia, where C. Gaymard is a director, and
of Bouygues, where she may be appointed, are both being held on 21 April 2016!
This seems incompatible given the need to be present at the Board of Director
meetings before the General Meetings to review written questions, among other
things, and, potentially, to attend meetings with colleagues. The General
Meeting is often an important time for companies because the main executives
living outside of France are normally all in Paris on that day...
Some will say that these agenda issues can be managed
in advance, which is true. However, they do highlight the fact that too many
director mandates can impact availability. It takes time to gain a full
understanding of a large group through meetings with the teams which provide a
firm grounding in the everyday life of the company and of its employees.
Others will say that it's difficult to find people of
this calibre who are actually available...which we find somewhat difficult to
believe given that a search can be broadened to all of France and to 320
million Europeans...
It's likely that certain major institutional investors
will not support Clara Gaymard's simultaneous appointment to the three new
director positions given what we have pointed out above and the inbreeding it
would lead to within major French corporations... This will probably be
misinterpreted, but it does clearly reflect the current ambiguity between the
apprehension of leading executives, notably of family businesses, about the
role of independent directors, and that of major institutional investors who,
from experience, believe that it is necessary for directors to be available to
provide support to their companies. And, that's really a shame!
Olivier de Guerre
PhiTrust
