PARIS — Activist investor group Knight Vinke Asset Management LLC has called for a change in the management structure of Carrefour SA, days after the troubled French retailer issued the latest in a string of profit warnings.
This story first appeared in the October 21, 2011 issue of WWD. Subscribe Today.
In an open letter to the company’s board, shareholders and employees, founder Eric Knight cited “serious governance issues” at Carrefour and advocated splitting the roles of chairman and chief executive officer, which Lars Olofsson has been holding concurrently since June.
“This situation is far from ideal and we call on the board to name an independent chairman as soon as possible,” said Knight, whose asset management firm has a 1.5 percent stake in Carrefour.
Knight Vinke also recommended splitting the role of ceo, with one executive in charge of high-growth emerging markets and another overseeing France and neighboring countries, whose poor performance has impacted Carrefour’s results.
The retailer last week cut its full-year operating income target for the second time in three months, predicting a decrease of 20 percent versus an earlier forecast for a 15 percent fall. This came on the heels of several profit warnings in the last year.
Knight Vinke stopped short of calling for Olofsson to resign, though it evoked the possibility of his replacement. “Regarding the role of chief executive officer, the company has within its ranks a number of highly experienced professionals with a real expertise in the retail sector, both in France and abroad. We do not believe the board would be justified in bringing in another external candidate to fill this position,” it said.
Officials at Carrefour declined to comment on the letter.