The successive announcements of executives of
major, listed French companies departing to other countries should give us
pause. The moves are a reflection of both the globalisation of these big
companies (over 70% and up to 80% of their business activities and employees
are in other countries) and the tax cost of high (excessive) remunerations for
both executives and companies compared to other countries. There is a major
risk of seeing the decision-making centres of these companies move away, and legal
and financial advisers, banks, etc. may too. The impact on a country's
innovation and growth capacity can be significantly impacted if the movement
becomes widespread and there is a real risk that the trend will be amplified in
the coming years.
We tried to encourage people to think about
this issue last year when Schneider Electric decided to return to single
governance with a CEO based in Hong Kong to manage growth in Asia. However,
there was no positive response from investors who supported the return to
single governance (while the previous chief executive congratulated himself on
the Supervisory and Management Board structure...) The departures announced for
strategic reasons have followed one another since with Francois-Henri Pinault
of Kering, Bruno Lafont at Lafarge and Chris Vierbacher of Sanofi, among
others. Not to mention the failed Omnicom/Publicis merger that would have moved
the head office to the Netherlands.
It's clear that the impact on the company
isn't the same if the CEO moves to another country or if it's just the General
Manager or the Chairman of the Management Board. Serge Weinberg, Chairman of
the Sanofi Supervisory Board is staying in Paris and doesn't intend to move
abroad. The group's governance and its Board of Directors should be staying in
France. This will promote Sanofi's anchoring in the country and will require
the operational manager to move closer to their teams on which they will have
to base the development of their strategy.
This situation is very different from that of
Schneider Electric which has a CEO in Hong Kong and a Board of Directors whose
members are increasingly non-French. This reflects the globalisation of listed
corporations and means that there is a greater risk that, one day, the Board of
Directors will meet outside of France (to visit the subsidiaries…). The logical
outcome will be to move decision-making capacity while waiting for a potential
merger or a buy-out that will relocate the decision-making centre once and for
all...
Large German groups are structured with
Supervisory/Management boards with a majority of German directors. In France,
most companies have Boards of Directors with a CEO and some have a majority of
non-French board members. There may not be a connection, but most of Lafarge's
directors aren't French...which probably explains their support for a strategy
of a merger "of equals" which would move the centre of
decision-making and governance to Switzerland. In our opinion, the
separation of roles is an answer to this governance challenge so we can keep
the decision-making centres of our large companies in France. It's urgent that
we pay heed to this.
Olivier de Guerre
Chairman of PhiTrust Active Investors
Chairman of PhiTrust Active Investors
