“The board has taken responsibility and we have to bring the company back to calm.” Gilles Schnepp, the new chairman of Danone, said in an exclusive interview with French media a few days ago. Xiaoshidai noticed that this is also the first time he has answered the hot issues concerned by the outside world since he took office in March.
In March, Danone announced the appointment of a new chairman and the acceleration of the selection of a new CEO. Xiaoshidai noticed that in an exclusive interview with France’s echo, Gilles Schnepp talked about his ideas on the “local priority” strategy and his expectations for the future CEO of Danone.
Now, let’s listen to the latest statement of the new chairman of Danone.
Echo: Why did Danone’s board of directors approve Emmanuel Faber’s resignation proposal?
Gilles Schnepp: first of all, I would like to say that fan Yimou has a landmark position in the history of Danone. Since the 1970s, the dual driven model based on commercial value and social value has been integrated into the gene of energy, and fan Yimou, like his predecessors Antoine and frank Riboud, is part of the company’s DNA. He made Danone the first listed company in France to adopt the governance mode of “enterprise à mission”, and also made all our businesses gain from the journey of obtaining B Corp certification before 2025. Today, more than half of Danone’s turnover comes from businesses that have won B Corp certification.
Echo: is fan Yimou’s failure to stay in office due to his over emphasis on the vision of social values?
Gilles Schnepp: of course not. In the long run, I even think that having a sense of social responsibility can become a competitive advantage for a company. A responsible business is more likely to succeed and achieve good financial performance. One of Danone’s advantages is that it began to focus on corporate social responsibility earlier than other companies. In this respect, we can’t “stop and go”, we must keep going, because we have no choice. An irresponsible enterprise can’t develop sustainably, which I personally and more and more management believe.
Echo: then why didn’t you keep fan Yimou’s position?
Gilles Schnepp: in recent months, Danone has been at the center of the “media storm.”. The board has taken responsibility, and we have to calm Danone back. Our team has a huge responsibility and they have to be able to focus completely on the business again.
Emmanuel Faber, former chairman of Danone
Echo: is the problem caused by “media storm” or performance?
Gilles Schnepp: before, some shareholders of Danone expressed their dissatisfaction. This is mainly due to the performance is not as good as some of the major peers, triggered a storm. But the fact is that Danone has been hit more by the epidemic than other companies.
Indeed, Danone is more affected by the epidemic than some competitors with pet food or coffee businesses because it has (quite a few of them) drinking water and beverage businesses, as well as infant nutrition businesses. As far as the stock price gap is concerned, it existed before the outbreak of the epidemic, which widened the distance. For now, our priority is to get back on track on the growth agenda.
Echo: has fan Yimou’s “local priority” strategy been questioned?
Gilles Schnepp: the board of directors has approved the organization (framework) plan, and the strategy has not been questioned. Like many companies, Danone still wants to give more power to the local team, so that the people closest to the market can lead and build an excellent product portfolio according to the local characteristics.
“Local priority” strategy will be gradually implemented in relevant fields. This will enable us to redistribute the resources that will be released, especially to reinvest in brand promotion and R & D. The goal of this strategy remains to give more authority and resources to market leaders in different countries to drive growth.
Gilles Schnepp, new chairman of Danone
Echo: should Danone adjust its business scope or sell its brand?
Gilles Schnepp: at present, we have not seriously considered adjusting the scope of business. Danone’s three businesses: basic dairy products and plant-based products, drinking water and beverages, and professional special nutrition are leading the global market, and even the market leader. Future CEOs will continue to evaluate their product portfolios and, of course, be able to make adjustments to their non strategic activities to the board of directors.
Echo: some people think that the separation of chairman and CEO is related to performance. Will this governance structure continue? Does that complicate the search for a CEO?
Gilles Schnepp: the separation of chairman and CEO has been approved by the board of directors, and this structure will continue. I don’t think that will complicate the search for a CEO. On the contrary, an independent non-executive chairman guarantees the chief executive officer in charge of operations full freedom of action.
Echo: when do you think Danone can recruit a new CEO?
Gilles Schnepp: we’ve had a meeting with the company in charge of recruitment, and the recruitment process has to be fast. It would be better to find a person from the agricultural food industry to be the CEO of Danone, but this is not an absolute condition.
Echo: the independence of the board of directors has been questioned. Should it be reformed?
Gilles Schnepp: we want to take a moment, maybe a few months, to think about the size and characteristics of the board. At present, the board of directors has 16 members, the number has exceeded the average level. Our goal is to remain highly independent. We are working on this with another company, not with the one responsible for recruiting a new CEO. At present, the independence of the board of directors exceeds the level recommended in this field. We have to be very vigilant.
Echo: what impact did the intervention of radical investor artisan partners have on fan Yimou’s departure?
Gilles Schnepp: the board attaches great importance to the information of all shareholders. They did not question fan Yimou’s “local priority” strategy, nor did they criticize the actions taken on the product mix. But, on the other hand, they want to separate the positions of chairman and CEO, and have an independent non-executive chairman. That’s exactly what it is now.
Echo: you said that Danone’s product portfolio is correct, the dual driven model of commercial value and social value must continue to be implemented, and the “local priority” strategy will also be implemented. So, why did you finally pass the resolution of leaving office?
Gilles Schnepp: in the face of this storm, the board has taken responsibility. The storm originated from the poor performance of stock prices, which was further aggravated by the epidemic. The market has clearly expressed a lack of confidence. The stock price gap between the company and its peers comes from the growth difference, and the growth is slower than that of its competitors. Month after month, this has created tension and questions among shareholders. Now, we are trying to get back to growth.