Is it not paradoxical to raise the issue although investors managed to strongly pervade european businesses with such idea for 10 years, and this in spite of a then long way to go?
However the crisis is upon us, and since 2008 we see many businesses changing their message on the pretext of a need to sooner deal with the crisis. Thus, in France, powers are concentrated (Chairman-cum-CEO) in a very wide majority of companies although most investors are convinced of the benefits of separating the duties (the Chairman only assuming a duty of shareholders representation, strategy implementation and control of the latter's execution).
Paradoxically many investors seem less prone to making sure of a best governance for listed companies although they are aware of the risks related to duties concentration either through authoritarian drift (e.g. Renault and the removal of CEOs in France and in Japan in 2013…) or by lack of control over operations (Société Générale…) or even by lack of sustainable strategy (Carrefour until 2012, Accor for many years…). The list of strategic issues related to governance issues is long and clearly shows the need for more significant control from shareholders over the decisions of the Board of Directors.
Here is what is at stake in the separation of powers. Very few company chairmen (be they either executive or not) consider that it is important to themselves meet all shareholders. Disintermediation of financial businesses bring them naturally to draw near intermediates (asset managers, insurers, hedge funds…) and more scarcely the end shareholders, some considering that shareholder clubs are necessary but of quite little importance, entrusting their deputies with the task to lead them.
As for shareholders they are also few to pay close attention to the businesses in which they directly or indirectly invest… which de facto creates a vacuum and leads our company managers to only see "financial" investors in their capital, rather than shareholders ready to support the development of a business.
We are convinced that listed company chairmen ought to spend time meeting shareholders in order to persuade them to invest in and to support the business, that this is not compatible with executive office for lots of time is to be spent on those meetings… and that to chair a company also means to lead the Board and to control strategy execution.
All these grounds bring us to continue advocating the separation of powers in large listed companies, and we hope many of you will assist us in providing to our best companies all the assets their growth will require.
Olivier de Guerre
Chairman of PhiTrust Active Investors