What appeared to be a classic CEO succession plan at Soitec is garnering strong reactions.
Planning who will be the next CEO of a publicly listed company is one of the most fundamental responsibilities of the board of directors. Such a decision may, however, be subject to dissension, and this is the case for the replacement of Paul Boudre at the head of Soitec.
Contacted by EE Times Europe, the company’s spokesman said he “can’t answer” and referred to the two press releases issued on Jan. 19 and Jan 21.
On Jan. 19, 2022, Soitec’s board of directors announced it had appointed Pierre Barnabé, currently Atos senior executive vice-president, group security officer and global head of big data and cyber security, as the new CEO, succeeding Paul Boudre in July 2022.
What appeared to be a classic CEO succession plan is garnering strong reactions.
Immediately after this announcement, Soitec’s executive committee sent a letter to the board of directors and strategic investors questioning the appointment process of the new CEO.
The executive committee, whose members remained undisclosed in the letter, wrote, “It is incomprehensible for the executive committee of Soitec that the succession plan, implemented by the chairman of the board of directors, was organized in such haste and in total opacity, without involving the CEO in the recruitment process and without consultation with the members of the executive committee, without serious consideration of internal candidates, who have been identified and prepared since 2018, thus going against all the rules of good governance.”
In the Jan. 21 press release, Soitec seeks to put an end to speculations and indirectly reassure the markets. The group indeed plunged 18.2% to the bottom of the index after the news broke. The press release states: “The announcement of Soitec’s leadership succession plan, on Jan. 19, is the result of a rigorous decision-making process based on a detailed assessment of the company’s needs for its next phase of development. The process, which began in March 2021, was conducted in complete conformity with best-practice governance standards and with the full support of Soitec’s main shareholders.”
Soitec has been listed on the Paris Stock Exchange since 1999. About 61% of Soitec’s capital, listed on the Paris stock exchange, is now free-floating. Bpifrance, the French Atomic Energy Commission (CEA), from which Soitec was originally formed, and the Chinese group NSIG share about a third of the capital equally.
In a video interview for French TV channel BFM Business, Nicolas Dufourcq, executive director of Bpifrance since its creation in 2013, intended to explain that things had been done “absolutely normally”.
Throughout its thirty-year history, the French group has had its ups and downs, but it has always been driven by technological innovation.
“We have been shareholders for a very long time,” said Dufourcq. “We were among those who helped save Soitec at a time when it was in great difficulty. In 2013-2014, we had €250 million in sales and €250 million in negative EBITDA. We had to cut the solar branch. We appointed Paul Boudre. We relaunched the entire company with the help of STMicroelectronics and the CEA. So everything started up again.”
Paul Boudre succeeded Soitec’s co-founder, André-Jacques Auberton-Hervé, in January 2015 as CEO and in September 2015 as chairman of the board. He then had two missions. The first one was to exit the company’s solar business and refocus on microelectronics. The second was to reverse the group’s financial trend, which had been in the red for many years.
In his first industry recognition, Paul Boudre was among the eleven personalities honored by VLSI Research for their contributions to the development of the semiconductor industry in 2015. He was listed alongside such industry experts as Wally Rhines, CEO of Mentor Graphics, Frits van Hout, vice president at ASML, and Gregory Smith, vice president of Teradyne.
Since his appointment in 2015, Boudre has contributed to the company’s recovery and growth to an expected $975 million in revenue for fiscal year 2021-2022, as reported in its latest financial releases. The Bernin, France-based semiconductor materials manufacturer said it now expects to triple its revenue to about US$2 billion by fiscal year 2025-2026. It also expects its EBITDA margin to increase from 30.7% at the end of March 2021 to about 35% by 2026, driven by an operational leverage effect but also by higher value-added products.
“The company has surfed the wave magnificently,” Dufourcq said, specifying that “Paul Boudre has done a very good job.”
Nonetheless, he continued, “Paul Boudre has reached the age limit, so it is normal for the board of directors to consider his succession.”
Boudre is 63 years old.
Is age the reason? To be confirmed.
During the interview, Dufourcq outlined that everything was done in compliance with the group’s established rules and objected to the strong reaction of the executive committee. He declared, “The ad hominem attack on the board of directors is totally unacceptable. It is the board of directors that has taken up the question and that, legitimately, as in all French listed companies, has a nomination committee.”
Dufourcq, who specified he had met Barnabé, went through each step of the appointment process: “A nominating committee was appointed. We hired a headhunter. The headhunter did his job. Things were done absolutely normally. Internal candidates were interviewed. The decision was made in full sovereignty by the board of directors. Now, we are moving forward.”
Soitec’s board of directors counts fourteen members.
On the company’s website, Soitec indicates that it has established governance rules in line with the most advanced recommendations. Its main reference guide is the AFEP-MEDEF corporate governance code of reference for French publicly listed companies. In terms of internal control, the group uses the framework established by the AMF, i.e., France’s stock market regulation.
As required by the regulatory authorities, the company’s board of directors consists of five committees dedicated respectively to sensitive strategic issues, strategy, audit, compensation, and nominations.
Dufourcq is also a board member of Orange and non-executive chairman of the supervisory board of STMicroelectronics.
This article was originally published on EE Times Europe.
Anne-Françoise Pelé is editor-in-chief of eetimes.eu and EE Times Europe.