THE VCOMV CAC 40 SURVEY:

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The route to responsible governance

In view of recent events such as the GHOSN affair and the resurgence of activist funds, etc., good governance is now more than ever a must.

We firmly believe that when it comes to business leaders, there are now four pillars of wisdom.

1. Organisation and the exercising of the checks and balances.

A director must be challenged by a whole series of checks and balances:

Independent boards of directors, likely to put forward counter arguments to eliminate any hint of crony capitalism. Two balancing mechanisms, amongst others: senior independent directors and executive sessions (meetings held without the executive officer being in attendance).
Independent boards of directors that are efficient and therefore not too numerous, so as to be able to exercise their control effectively, failing which they are simply rubber-stamping chambers.
Dissociated governance: GALLOIS-TAVARES at PSA, SENARD-de MEO at RENAULT and WEINBERG-HUDSON at SANOFI.
Strong Executive Committees to prevent any authoritarian management.

2. Management Depth.

Three golden rules to observe:

Surround yourself with the best people, smarter than yourself;
Recruit the best people, which does not necessarily mean your best friends from your year;
Attract the best and know how to retain them in the long term, i.e. know how to ensure their development.

3. Preparing for succession.

In the USA, any self-respecting CEO has to prepare their strategic plan AND their succession plan with the same degree of care and enthusiasm.

Now actually within the CAC 40, there are still about a dozen business leaders who are not officially preparing their succession.

The most logical and therefore best successions are those that take place in-house. That was therefore the intention, in 2018, of all CAC 40 companies faced with this scenario, with a view to maintaining continuity (CHERY at STMICROELECTRONICS, COQUART at LEGRAND, FAURY at AIRBUS, MACHUEL at SODEXO and MENEGAUX at MICHELIN).

4. Corporate and social conscience.

Good governance is not just about applying the Laws or Codes, it is also, and perhaps more importantly, about being able to inject more soul into the company.

Henceforth, the company’s stock market and financial performance alone will not be enough to evaluate a CEO: their social policies and imprint on society need to be added to the mix.

Directors have a duty here to set an example, because if the company is not given a clear “raison d’être”, the younger generations will continue to cold-shoulder the major groups, in favour of setting up their own business or even going abroad.