Lafarge and Alstom… two major French companies trying to change while taking into account the strategic challenges they have drawn-up. They are taking two different approaches, both of which will eventually lead them to move their decision-making centres out of France.
Governance has suddenly become a major issue for those who believe that we can't let our best companies be bought because we would be at risk of losing power (Arcelor) or losing them altogether (Pechiney).
Our neighbours in the United Kingdom have long let the market play its role. One result, for example, is that British automobile manufacturers were bought out one after the other only to be "reborn" as important vehicle builders under the control of foreigners.
In Germany, structures with a Supervisory Board in which employees actively take part have made it possible to keep very strong shareholder control of large companies which have become multinationals. Two different growth models, two opposite approaches and France swaying between the two for many years, reacting, but usually late or too late.
What is most striking at Lafarge and Alstom is the fact that their Boards of Directors consist primarily of personalities who are renowned, but not French. It isn't surprising that they promote cross-border operations, with a global vision, something that would be much harder to propose to a majority French Board (as is the case with the Supervisory Boards in Germany).
The concept of Board of Director member competence at highly international companies conflicts with that of nationality: should the board be composed of a majority of foreign members when the company is very international and has a majority of foreign shareholders? If yes, how do we "protect" these companies and ensure that their decision-making centres aren't moved?
The answer is probably in the question itself and it wouldn't be unreasonable if some suggested that the largest French companies have a board consisting of a majority of French directors to ensure French governance. Many others will rebel against this new form of "protectionism" while others will claim that it wouldn't be naive given that some European countries find a number of different ways to "protect" companies.And governance, or rather the composition of the Boards of Directors of listed companies with very diluted capital, could again become a political issue!
Olivier de Guerre
Chairman of PhiTrust Active Investors