Danone’s board of directors decided to replace Emmanuel Faber as CEO and president, succumbing to pressure from activist investors and blowing up a two-week compromise created to keep him in the presidency.
After a lengthy committee meeting on Sunday night, Danone announced Faber’s departure with immediate effect on Monday, confirming earlier reports in the Financial Times and Le Figaro.
It was the dramatic end of months of conflict in a French consumer goods group, which stood behind bottled Evian water, Activia yogurt and Alpro soy milk, which has been falling sharply in sales since the start of the pandemic. Activist investors attacked Danone because of what they considered a chronic poor performance compared to bigger rival Nestlé and publicly called for Faber’s departure.
Gilles Schnepp, a former CEO of the Legrand industrial group who joined the Danone board in December, has been appointed president and will lead the search for a new CEO.
Two executives already in the company will “run the business together” as the search progresses: Véronique Penchienati-Bosetta, who led the international operations, and Shane Grant, the head of North America.
Shares of Danone rose 4 percent on Monday morning.
The departure of Faber, who joined the group in 1997 and took over as CEO in 2014, marks the downfall of one of the most prominent proponents of global business for more responsible capitalism in which companies not only serve shareholders but also protect the environment, their employees and suppliers.
Danone accepted a more humane multi-stakeholder business model that went back to the 1960s under the leadership of Antoine Riboud and Faber continued in that tradition.
When Danone shareholders approved a change in the company’s legal status last year to solidify its social mission, Faber said they had “demolished the statue of Milton Friedman”. Danone became the first large French company to be listed on the stock exchange, which became the so-called a company with a missionor a dedicated company.
Faber also supported the growing environmental, social and governance movement among investors in other ways, for example when the group started reporting “Climate-adjusted” earnings per share last year and has invested heavily in reducing the use of plastics.
Although activists campaigning at Danone were careful not to directly attack its focus on sustainability, they argued that the balance between the interests of shareholders and others was lost under Faber.
A public campaign conducted since January by activist Bluebell Capital and Artisan Partners, an American fund, was carried out by Faber and the board of directors under strong pressure to respond to criticism. Several shareholders privately stated that they also support them.
Danone tried to calm the quarrel on March 2 by announcing that he would divide the roles of president and CEO held by Faber and they start looking for a new CEO. Faber will remain in the presidency, and the board said it continues to support the layoffs and restructuring plan it has advocated to turn the group around.
But Bluebell and Artisan rejected the plan, saying the moves would tie the hands of any new CEO and allow Faber to retain too much power. “The new changes announced at Danone violate the most basic standards of corporate governance,” Artisan wrote in an open letter to the board.
In the days following the announcement, other shareholders also expressed their concern, people familiar with the matter said.
Dissatisfied shareholders were particularly concerned about the decision also announced on March 2 that Schnepp would not be the leading independent director, as previously planned, but would instead hold an important supervisory post for Jean-Michel Severin, a 2011 board member and close Faber ally.
Severino has since held meetings with top shareholders, which one person close to the group said “did not go well” and left some with the impression that it would not be an effective counterweight to Faber.
“The board’s priority now is to move to improved management” by speeding up the process of hiring a new CEO, “Schnepp said in a statement.