Dairy and baby food giant Danone has said Emmanuel Faber will step down as chief executive in an attempt to alleviate pressure from shareholders who have called for new management to revive the world’s largest yogurt maker.
Danone said it will separate the chairman and CEO positions, which Mr Faber has held for the past three years. Once the company finds a new CEO, Mr Faber will become non-executive chairman.
Danone is suffering on three fronts. Non-dairy substitutes are failing to compensate for a slowdown in yogurt. Meanwhile, demand for bottled water has wilted as restaurants close due to the pandemic, while infant formula sales weaken due to slowing birthrates.
Danone employs around 700 people in its baby food business in Ireland, across operations in Macroom, Wexford and Dublin.
“This is not a clean break,” wrote Bruno Monteyne, an analyst at Sanford C. Bernstein. The situation risks either leading to a new CEO who is controlled by Faber, or another stand-off with investors further down the line, he said.
Bluebell Capital Partners, one of the shareholders that campaigned for a management shake-up, said that the announcement marks a step in the right direction, but what Danone really needs is external leadership.
“There should be an outside candidate, somebody who is not connected to the past,” said Bluebell chief investment officer Giuseppe Bivona. “It’s good to split the role of chairman and CEO, but obviously what we want, what the company deserves, is an independent chairman, which clearly is not going to be the case.”
The company said the board unanimously supports Mr Faber, who will continue managing Danone until a new CEO arrives.
A rising chorus of shareholders, including Artisan Partners Asset Management and Causeway Capital Management called for a management revamp in recent weeks. Pressure on Mr Faber mounted as Danone’s shares lost a quarter of their value in 2020 and sales fell for the first time in more than 30 years.
Danone’s board also appointed Gilles Schnepp as vice chairman, alongside Cecile Cabanis, the company’s former chief financial officer. Mr Schnepp’s role as lead independent director will be transferred to Jean-Michel Severino, who also acts as head of the governance committee.
Analysts said that those shifts give Mr Faber more power, as he pushed for Mr Cabanis and Mr Schnepp to become new board members last year.