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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.

29 février 2016

Three new director mandates for Clara Gaymard. Is this reasonable?

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