Danone's ex-CEO denounces backroom deals in "dependent" boards

Emmanuel Faber, who has been CEO of Danone until mid-March, is lashing out: he has been dismissed by activist shareholders, who he claims have compromised the board of directors. The board is in need of reform.

Dismissal under false pretences

Faber believes that Danone’s independence is in jeopardy: the company has fallen prey to backroom politics and the board of directors has made a deal with activist shareholders who have become too powerful. This is what the aggrieved ex-chief executive said at a hearing with the French Economic Commission, currently investigating the events.

According to Faber, not only was the pressure from shareholders unfounded, but the extent to which the board of directors allows itself to be influenced by these large investors is, in his opinion, downright dangerous. A board of directors is supposed to be independent, but the former CEO talks about two-sided manipulation – whereby the shareholders managed to get board members to do their bidding but, conversely, internal activists on the board of directors also incited the shareholders.

Faber himself fell victim, he believes, and his dismissal was under false pretences. Those who accuse him of inadequate financial performance forget the state he found the company in when he took office in 2014. Then, of course, there was the coronavirus pandemic. The idea that activist shareholders are compelled to intervene is also false: they just got there because of the crisis and are therefore the consequence and the cause, concludes the ex-manager.

Law on boards required

“Rearguard actions have gained the upper hand” in an “extremely unhealthy game”, quotes Les Echos. “The activists have obtained things they did not even expect. When you start a game that way, it is dangerous,” said Faber, who is convinced that his departure is only the first battle in the power grab. Faber, therefore, believes that the board of directors urgently needs to be reformed and renewed.

Not only at Danone: all over France and Europe, laws should better regulate the functioning of boards to put an end to collusions and “pay inflation”, Faber said. In his view, better legislation should back the boards.