News: Danone activist investor says Faber should quit as chairman.
PARIS (Reuters) – An activist investor in French food company Danone said Emmanuel Faber must be ousted as chairman in order for the company to start over and turned down a proposal by the board to hire a new director.
Danone’s shares fell Tuesday after the company announced that Faber – who has so far combined the roles of CEO and chairman – would continue to serve as chairman and oversee the search for a new director.
Bluebell, one of two activist shareholders who spearheaded a restructuring campaign, said in a letter to Danone’s Vice Charman Gilles Schnepp that the changes were a positive first step, but not enough.
“For a new CEO to be successful, he / she must be free to determine the company’s strategy independently, without being constrained by previous management decisions,” the letter said.
“Mr. Faber’s continued role as Chairman of the Company will be extremely detrimental as it will seriously affect the Board’s ability to attract the right talent. Judging by the reaction of the stock price, this view appears to be shared by the market. “
Bluebell strongly recommended that the Danone board of directors reconsider the decision to keep Faber as chairman and instead appoint an independent chairman before hiring a new CEO.
Danone didn’t immediately respond to a call asking for a comment on the Bluebell letter.
Activist investors say Danone needs a management overhaul because under Faber’s tenure, sales growth, margins and stock price lagged behind competitors, including Perrier-owner Nestle and Unilever, maker of cornetto ice cream and Lipton tea.
The other activist investor, Artisan Partners, who is pushing for a switch, has not yet commented on the changes. Artisan is Danone’s third largest shareholder with a stake of around 3%.
Danone said late Monday that Faber, who has been CEO for seven years and took the chair in 2017, would remain as non-executive chairman once a new CEO was found.
The shares of the world’s largest yogurt maker initially rose up to 0.9% before reversing their course and falling into negative territory. By 1629 GMT, the stock fell 2.1% to 56 euros, well below its 2019 high of 82 euros.
“The market is disappointed that Faber continues to chair,” said Gregoire Laverne, fund manager at Paris-based investment firm APICIL, which owns Danone shares.
“This is not a clean break,” said Bernstein analysts of the plan to split the CEO and chairman jobs.
Reporting by Sarah White, Gwenaelle Barzic, Sudip Kar-Gupta; Letter from Christian Lowe; Adaptation by Barbara Lewis
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