Former Danone chief says power struggle was behind his ousting
Emmanuel Faber points to ‘previous leaders’ wanting ‘to regain more clout’
Former Danone chief executive Emmanuel Faber said a boardroom power struggle led to his dismissal in March, and not a campaign by activist hedge funds nor his prominent advocacy for companies to act on environmental and social issues.
In his first interview with the international press since his departure, the 57-year-old described months of infighting, including over his plan to reorganise the French consumer goods along more geographical, rather than product lines and axe 2,000 jobs.
With Danone’s financial results worsening because of the pandemic, some board members opposed the strategy and wanted Faber out, people familiar with the matter earlier told the Financial Times.
They used his activism on environmental, social, and governance issues as a convenient weapon but it was not really about that at all, said Faber.
“ESG was the excuse that people found to play this game,” he said.
“The fact is that these activists had no plan, and without support from inside the board, they would just be nowhere. The activist investors were allowed to play for reasons that were related to a situation where the board was not functioning properly.”
Although Faber did not mention him by name, he described a power struggle with Franck Riboud, the former Danone chief executive and chair who selected Faber as his successor in 2014.
Although Riboud’s official title is “honorary chair” of the board, he has outsized influence as the son of the company’s spiritual founder, Antoine Riboud. His father not only built Danone into a global player, but also laid out its distinctive culture in a 1972 speech that argued that business had a responsibility to further social progress beyond “the factory gate or the office door”.
“It’s very clear that previous leaders had hopes to regain more clout,” said Faber. “The reasons why [for his ousting] have very little to do with actual performance.”
Riboud could not be reached directly, and Danone declined to comment.
Tensions began late last year when Faber announced the restructuring plan, called “Local First”, along with the unexpected departure of longtime finance chief Cécile Cabanis, the latest in a series of high-level exits.
The crisis broke into the open in January when activist fund Blue Bell Capital took a small stake and began calling publicly for changes, including Faber’s departure. They were joined later by US fund Artisan Partners.
The board of directors led by new chair Gilles Schnepp, the former head of industrial group Legrand, is now searching for a new chief executive. But Schnepp has pledged to stick with Faber’s “Local First” plan, so the incoming leader may have limited room to chart a new course.
Danone must also honour the obligations it made to secure legal status as an entreprise à mission, or purpose-driven company, one of the first companies in France to do so. Faber had championed the change as key to creating a new form of governance to allow Danone to serve a wider set of stakeholders such as farmers, customers and employees, rather than just shareholders.
The change was overwhelmingly backed by a shareholder vote in June 2020. Faber then declared that they had “toppled the statue of Milton Friedman here today”, referring to the renowned American economist and proponent of free markets.
But while the activist investors criticised Faber for not delivering for shareholders, he does not see his ousting as a sign that Friedman’s ideas have prevailed.
Instead he believes that Danone will continue its work in areas from soil health to carbon emissions, and that more companies will incorporate purpose-driven values into their management.
“You will see that entreprise à mission will stay . . . I’m absolutely convinced about it,” he said, adding that the system can actually be a stabilising force for companies.
Other chief executives should not fear backlash from activist investors if they decide to pursue purpose alongside profit, he said. “You need just to make sure that the board is there with you.”