Activist Target Pernod Boosts Board Independence With New Role
French spirits group Pernod Ricard named business veteran Patricia Barbizet to the newly created role of lead independent director on Wednesday as it faces pressure from activist investor Elliott to improve its governance.
Pernod Ricard, which makes Martell cognac and Jameson whiskey, also said longtime founding family ally and former chief executive Pierre Pringuet was stepping down as vice-chairman of the board, although he will remain a director.
By creating the role of lead independent director, a position which is not widespread in corporate France, Pernod Ricard is bringing itself more in line with corporate governance norms in the United States and Britain.
"The decision ...is the continuity of a thought-process that started in July 2018," Pernod Ricard Chairman and chief executive Alexandre Ricard said, adding that it followed a triennial external review of the board and long-term shareholder feedback.
U.S. activist fund Elliott said in December it had spent around €930 million to build a stake of just over 2.5% in the world's second-biggest spirits maker.
Elliott, which could not immediately be reached for comment, has called on Pernod Ricard to raise profit margins to bring them more in line with larger rival Diageo and improve governance.
In particular, Elliott says Pernod's 15-member board needs to be more diverse and have more independent voices, as many directors are linked to the Ricard family.
With Pernod Ricard's combined chairman and CEO roles, the lead independent director position could help provide a counterweight to family influence at the company.
Barbizet is an influential French business figure who became an independent Pernod Ricard board member in November 2018 and was recently appointed chairwoman of a committee that sets corporate governance standards for big French companies.
She has served as CEO of Artemis, the holding company of the Pinault family which controls luxury giant Kering, and has also headed auction house Christie's.
Her new role entails being in charge of corporate governance matters and overseeing corporate efficiency, Pernod Ricard said.
Alexandre Ricard, the 46-year-old grandson of the firm's founder who took over in 2015, has met at least twice with Elliott representatives, including last week in Paris in talks both camps have said were cordial and constructive.
The company says its efforts to improve its governance began long before Elliott's arrival, and it had already hired three independent directors, including Barbizet, in November.
Ricard is expected to present his new three-year strategy later this year, though some analysts expect the company to give some direction on margins with first-half earnings on 7 February.
Of its 15 board directors, Pernod Ricard classifies seven as independent, including two who represent Groupe Bruxelles Lambert (GBL), a long-time Pernod investor which owns a 7.5% stake and has said it supports the group's strategy.
The Ricard family itself controls 15% of Pernod's shares and 21% of voting rights.