Danone’s board of directors has decided to replace Emmanuel Faber as both chief executive and chairman, according to people familiar with the matter, blowing up a two-week-old compromise designed to have him remain as chairman.
The board met on Sunday evening as the crisis deepened at the French consumer group, which since January has been under attack by activist investors that have criticised what they see as its underperformance. The investors have called for Faber’s departure.
The board decided that Gilles Schnepp, the former chief executive of industrial group Legrand who joined the Danone board in December, would become the new chairman, said the people. Internal executives were being lined up to serve as CEO on an interim basis while the search for a new leader can be carried out, said one of them.
Danone declined to comment. The news was first reported by Le Figaro newspaper.
The downfall of Faber, who joined the group in 1997 and took over as CEO in 2014, caps a tumultuous period at the maker of Evian bottled water and Actimel yoghurt. The Covid-19 pandemic has hit sales of Danone’s products hard, especially bottled water, as restaurants and bars closed and consumers spent more time at home, while costs from transport to raw materials have risen.
The public campaign carried out by activist Blue Bell Capital and later by the larger Artisan Partners Management, a US fund, put Faber and the board under intense pressure to respond to the criticism, especially as more shareholders indicated in private that they too supported them.
Danone sought to calm the acrimony on March 2 by announcing that it would split the chairman and chief executive roles held by Faber and begin to search for a new CEO. But Faber would stay on as chairman, and the board said it continued to back the lay-off and restructuring plan he had advocated to turn round the group.
But Blue Bell and Artisan soon rejected that plan, saying the moves would tie any new CEO’s hands and allow Faber to keep too much power. “The new changes announced at Danone violate the most basic of corporate governance standards,” wrote Artisan in an open letter to the board.
In the days after the announcement, other shareholders also expressed misgivings, said the people.
Of particular concern to the dissatisfied shareholders was the decision also announced on March 2 that Schnepp would not be the lead independent director, as previously planned, but instead that the oversight position would go to Jean-Michel Severino, a board member since 2011 and close ally of Faber.