Media Coverage: Jean-Philippe Saint-Geours, AltoPartners OCO member, former AltoPartners Chairman and current Managing Partner Leaders Trust International - France, the exclusive AltoPartners member firm in France, Explores Corporate Governance in France

This interview was first published in the Spanish version of the Executive Excellence Magazine, the magazine of Leadership, Talent and Multidiscipline Management.

To read the original interview and article in Spanish, visit the online magazine here

Question: What kind of regulation do you have in France?

Jean-Philippe Saint-Geours (JPSG) Answer:

In France, we have the following regulatory codes that we must comply with:

• A Corporate Governance Code since 1995, issued by the Association of the main listed companies – Dealing with Directors independence, availability of CEOs (limitation the number of external directorships), composition of Audit and Nomination & Compensation committees (expertise, independence);

• A High Authority for Corporate Governance, since 2013, whose duty is to scrutinize the compliance with the Code and give advice when asked for by companies. They assess the “comply or explain” attitude of listed companies; and

• A Law on the mandatory percentage of women sitting on the listed companies Boards: 20 % in 2014, 40 % in 2017.

“Therefore we combine a mix of auto-regulation by the companies’ representative bodies, few legal obligations, and much financial markets and media pressure.”

Question: Was it difficult to comply with the diversity legal constraints?

JPSG Answer:

• In 2014 we reached 27 % of women on Boards (instead of 20 %), and we are confident the 40 % target in 2017 will be completed.

• The process has been easy to manage because Executive Search has predominantly been used by Boards to make the right appointments happen, and because many Committees quickly came to the decision not to look only for women CEOs (there are few !) but also for experts, and branch or subsidiaries executives.

Question: What is your perception of independence for Board members?

JPSG Answer:

• Independence is firstly and importantly the absence of conflicts of interests: no family links with the company’ executive and main shareholders, no significant business relations, etc.

• Our Code states that after 12 years of presence in the boardroom, a Director is no longer considered as independent.

• But, I firmly believe that this rule should be challenged because a seasoned Director is more capable of giving advice when he has a very good knowledge of the company. However, on the other hand, the challenge could arise that he may have some “complicity” with the management after having served for a long period.

Question: Should the Board members be experts in some area?

JPSG Answer:

• The Boards should put together a few experts of the company’s sector, but not too many (2 to 3). The other Directors should be executives able to assess and advise on the “big picture” in terms of global business, particularly in the emerging countries, as well as newer trends and issues impacting companies, such as digitization and cyber security amongst others.

Question: Is the level of Board members compensation in France appropriate considering their responsibilities?

JPSG Answer:

• I would say no. The average level for CAC 40 is around 65,000 €, far below the UK, US, Swiss benchmarks.

• More importantly, I believe that there is a sort of “vicious cycle” between compensation, commitment, and responsibilities. Paying “peanuts” could mean that you do not expect important involvement and work. This assumption hampers attractiveness of French Boards for foreigners. The reality is that French Board members work a lot and have serious risk exposure. But the current political environment unfortunately impedes an alignment with the international standards.

Question: Blackrock now considers that the composition of the Board and the way it works are key elements to be assessed before deciding a significant investment. Is it a trend you are experiencing in France?

JPSG Answer

• Yes. And as Executive Search consultants we are extremely involved in the building up of the corporate reputation of our clients: First when looking for Non-Executive Directors, and secondly through the Board Assessments we are extensively rolling out. The Board Assessment, which is highly recommended in our French Code, is becoming an increasingly regular process for listed companies which wish to be in a continuous progress approach and to demonstrate to the market place that they are complying with the best practices.

• Additionally I must mention the debate about “dual or single” governance which is somewhat peculiar in France. Previously, we used to have a PDG (Chairman and CEO) running most of the companies. Recently, the roles have been split in order to help a soft transition between a full PDG and a CEO, mentored by the ex-PDG who became a Non-executive Chairman. Some corporate governance activists loved this process; as did the Government. Therefore it is getting seriously controversial to merge back the roles again, which is wanted in many situations. Honestly, I do not believe there is a magic formula which guarantees the best governance in this area but, when there is a PDG, I think it is wise to install checks and balances within the Board with the nomination of a Lead Independent Director.

Question: In France you have Board members who represent the employees in the companies where there is a State shareholding . What value do they add? Do you think it should be extended to all companies?

JPSG Answer:

• Through the many assessments that I have carried out for the Boards, I have been strongly convinced that the benefits of having employees’ representatives on the Board are higher than the constraints. They are definitely stakeholders of the company and they have an interesting perspective about it that the other Directors cannot have.

• French Boards should not be reluctant to have these representative groups on their boards and should organize themselves better in order to get the best outcome from the employees’ directorship.

Question: What can we expect from Corporate Governance in the next few years?

JPSG Answer:

• The economy is coming under more and more legal scrutiny. Simultaneously, the global market changes are increasingly dramatic.

• In this context, Board members are facing more exposure to criticism and at risk in their decisions.

• Given this perspective, I think Boards members should seriously focus on the way they work together and make decisions (and get help from external consultants in this area …!), and make sure that checks and balances are appropriately in place and doing well with someone leading the challenge of the Executive team, a Non-Executive Chairman or a Lead Independent Director.

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About Jean-Philippe Saint Geours

A graduate from the Institut d’Etudes Politiques de Paris, the Law University of Paris and the Ecole Nationale d’Administration, Jean-Philippe Saint-Geours started his career as a civil servant in the Ministry of Economy and Finance and in the Ministry of Industry.

He also spent two years as an Advisor to the French Prime Minister, before being appointed General Manager of the Paris Opera (1983-1989).

In 1989, he joined Publicis Group as General Manager of “Medias et Régies” branch (space and air selling and marketing).

He entered executive search in 1995 with Heidrick & Struggles as a Vice-President in Paris, served as Managing Partner of the firm for France, and was named a Vice Chairman in 2002. Jean-Philippe Saint-Geours joined Leaders Trust International in September 2003 as a Partner. His executive practice encompasses a wide variety of engagements in general management (CEO, COO, CFO, Communications, HR) and Board directorships.

His main search experience sectors include industry, distribution, media, public services, insurance and trade organizations.

Jean-Philippe Saint-Geours also extends his ability to Executive Management Review, Executive Committees and Boards of Directors assessment services. Particularly, he handles a yearly survey on Corporate Governance trends in France, and is closely involved in the Institute of French Directors (IFA) taskforces and events.

Jean-Philippe Saint-Geours is a Member of the Executive Committee since October 2005.

Member of the Operating Committee of AltoPartners since 2006, he has been Chairman of AltoPartners between 2009 and December 2014.