Danone has announced Emmanuel Faber is to relinquish his role as the French dairy major’s chief executive after seven years heading up the company.
Faber, who has also held the role of chairman, has come under increasing pressure from disgruntled investors in recent weeks calling for structural change and asset sales in an attempt to boost the company’s financial performance.
After a board meeting yesterday (1 March), it was announced the roles of CEO and chairman would be separated – a key demand from critical investors. Danone said the proposal came from Faber himself, who will in future focus on a new role of non-executive chairman.
The separation will become effective upon the appointment of a new CEO. The process to recruit one has been launched.
Faber said: “I am pleased we took the governance arrangements that will allow us to anticipate the next phase of development of the truly unique company Danone is, as we open, with our ‘local first’ plan, a new step towards the company’s reinvention.” Danone set out its “local first” agenda in November in a bid to become more agile and better serve customers.
Danone’s board has also made other changes, which it said will “continue strengthening Danone’s governance”.
Gilles Schnepp has been appointed as vice-chairman, alongside Cécile Cabanis, the company’s former finance chief, and Jean-Michel Severino becomes Danone’s lead independent director and chairman of the governance committee.
The Activia and Alpro brands owner has been under fire from US investor Artisan Partners, its third-largest shareholder, and London’s Bluebell Capital Partners, which have urged Danone to make governance changes, including finding a new CEO, and to increase efforts to boost returns, partly through the sale of non-core assets.
Faber has overseen a strategy of diversifying into high-growth areas such as plant-based products.
But some investors and analysts have suggested Danone is not performing as well as its rivals. At the end of last year, Danone announced it would be reducing headcount by 2,000, trimming product ranges and selling some assets, including the group’s business in Argentina and the Vega plant-based brand.
On Sunday (28 February) that disposal programme continued when Danone announced plans to sell its stake in Chinese dairy firm Mengniu and use the gains to buy back its own shares.
Danone’s 2020 financial results, issued two weeks ago, revealed sales were down 6.6% at EUR23.62bn (US$28.62bn).
On Friday (26 February), Artisan Partners said the results “exhibited a continuation of poor performance” and the investor re-iterated calls for structural change at Danone, including Faber being replaced as CEO.
Reacting to today’s news Faber is indeed standing down from the role, Martin Deboo, an analyst at Jefferies, said: “We expect these changes to be viewed positively, dealing as they do with issues raised in recent advocacy by Artisan and others. However, Faber’s presence as chair alongside former CFO Cecile Cabanis as vice-chair is likely to constrain the latitude of any new CEO. Much will depend on who that person is.”
Alain Oberhuber, an analyst at financial services firm Stifel, said: “We find the step positive for Danone, as we think that there will be a stronger focus on profitable activities in the future.”