Danone’s board has decided to replace Emmanuel Faber as both CEO and chairman, according to the people familiar with the matter, and inflate a two-week-old compromise to keep him as chairman.
The board met on Sunday night as the crisis deepened among the French consumer group, which has been under attack by activist investors since January, criticizing what they see as underperformance. The investors asked for Faber to leave.
The council decided that Gilles Schnepp, the former CEO of the industrial group Legrand who joined the Danone council in December, would become the new chairman, the people said. Internal managers are being set up in the meantime to serve as CEO, while the search for a new leader can be carried out, one of them said.
Danone declined to comment. The news was first reported by the newspaper Le Figaro.
The downfall of Faber, who joined the group in 1997 and took over as CEO in 2014, is holding a turbulent period at the manufacturer of Evian bottled water and Actimel yogurt. The Covid-19 pandemic hit sales of Danone’s products, particularly bottled water, hard as restaurants and bars closed and consumers spent more time at home, while the cost of transporting raw materials rose.
The public campaign carried out by activist Blue Bell Capital and later by the larger Artisan Partners Management, a US fund, put intense pressure on Faber and the board to respond to the criticism, especially as more shareholders indicated privately that they support them too.
On March 2, Danone tried to calm the problems by announcing that he would split the chairman and CEO of Faber and go looking for a new CEO. But Faber will remain as chairman, and the board has said it will support the layoff and restructuring plan he advocated to turn the group around.
But Blue Bell and Artisan soon rejected the plan, saying the actions would bind any new CEO’s hands 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 after the announcement, other shareholders also expressed reservations, the people said.
The concern for the dissatisfied shareholders was that the decision was also announced on March 2 that Schnepp would not be the leading independent director as previously planned, but that the supervisory position would go to Jean-Michel Severino, a board member since 2011 and includes ally of Faber.