- Danone will overhaul its board of directors, its board announced Thursday. The changes were a joint proposal of all current members, a release from the company says, and all members, except for the two representing Danone employees and Chairman Gilles Schnepp, will leave when their terms expire — all by 2023.
- The total number of board members will be 12 rather than the 13 it is now. Two seats will be reserved for Danone employees, and incoming CEO Antoine de Saint-Affrique's nomination as a director will be considered at the next board meeting.
- Danone has been targeted by several activist investors — including Bluebell Capital Partners — for poor performance and disappointing stock prices. The pressure led to former CEO Emmanuel Faber stepping down from his position at the company and on the board and the selection of Barry Callebaut CEO de Saint-Affrique to head the international dairy giant.
After receiving a mandate from investors, Danone has been making relatively quick changes, overhauling leadership and procedures to try to win back some of the sales and investor confidence it has lost. The replacement of most of the board is the next step in trying to set the yogurt and plant-based giant on a different path.
"From here on, we will focus on the next step of Danone’s governance evolution with two objectives: on the one hand, recruit new talent with strong international experience and sectorial expertise while ensuring the diversity and independence of the Board of Directors; and on the other, clarify the working principles of the Board of Directors within the new framework of separated governance,” Schnepp wrote in a statement. He became the chairman of the board after Danone separated the position from the CEO role in March.
It's not clear what kind of expertise will be sought to make up the new governing board, or if representatives from activist investors will be included. Bluebell Capital Partners, which started the recent chain of events when it sent a letter to Danone director Michel Landel in November, holds an undisclosed stake in the company. According to reporting on Bluebell's communications with the company, the firm does not appear to have asked for a seat on the board.
Regardless, a new board will help give de Saint-Affrique a clean slate as he takes the helm of Danone this fall. He is a seasoned food executive and has spent the last six years running international chocolate ingredients leader Barry Callebaut. Before that, he was at Unilever for 15 years, including four years as president of its foods division.
Bluebell's chief complaints about Danone were about its poor track record in operations under Faber and questionable choices for spending its money. Under Faber, the activist investor said, Danone had delivered shareholder returns of 21%, compared with 56% for the Stoxx Europe 600 Food & Beverage, 97% for Nestlé and 101% for Unilever.
However, some of that is already changing. Danone reported its results from the first half of 2021 on Thursday, and interim co-CEOs Véronique Penchienati-Bosetta and Shane Grant heralded the company's return to growth across all segments. Like-for-like sales were up 6.1% in the most recent quarter, compared to the same time last year, and up 1.6% in the first half of 2021. Although inflationary pressures and shortages are sending commodity prices higher, Danone was able to keep its margins at 13.1% through a mix of selective pricing, increased productivity and cost discipline as well as stronger investment and brand support, Penchienati-Bosetta said on the earnings call.
Business decisions made under Faber's leadership also contributed to the upbeat earnings report. Danone has been undergoing a comprehensive business review and made plans in February to sell its stake in China Mengniu Dairy for $2 billion. The deal was completed in May. In June, Danone sold its plant-based powder brand Vega to funds managed by a private-equity firm.
Danone is also in the midst of transitioning to a new companywide strategy called Local First, Penchienati-Bosetta said on the call. This new plan, which is being implemented country by country, unites different segments of Danone's business as a single entity. The strategy will contribute to a gross savings target of 700 million euros ($831.5 million) by 2023, Penchienati-Bosetta said.
Investors clearly liked what they heard from Danone on Thursday, with stock prices going up about 9.6% in just one day.