Jozef Lievens is a professor at the European University College Brussels and executive director of FBN Belgium.
The presentation by Thierry Peugeot was one of the highlights of the 17th FBN Summit in Cannes. He outlined the role played by the Peugeot family in the PSA Group, the producer of vehicles carrying the Peugeot and Citroën brands, reports Jozef Lievens
Peugeot is not just any family company. It was set up in 1810 and is currently in the hands of the eighth generation of the Peugeot family. The family holds 30% of the listed shares in the company. Thanks to plural voting rights provided for by French company law, the Peugeot family however holds 45% of the votes, thereby enabling it to exercise control over the group by a comfortable margin.
Peugeot acquired control over Citroën in 1976, creating the PSA Peugeot Citroën Group. Since acquiring Citroën, enormous efforts have been made to integrate the two companies. After all, it is not without reason that the company's motto reads: "One group, two brands".
The figures of the PSA Group speak for themselves. In 2005, 3.4 million new cars left the assembly line with a turnover of €56.3 billion. PSA is Europe's second largest car producer and the sixth largest in the world and employs 207,000 people.
PSA has a two-tier governance system, which was introduced in France in 1966. A key feature of this system is the splitting up of the leadership of the company into a supervisory board (le conseil de surveillance) and a management board (le directoire).
The Peugeot family sits on the supervisory board, which is made up of 12 members, including Thierry Peugeot and four other members of the family. Four members are well-known in the business world, and include Ernest-Antoine Seillière of the Wendel Group, Jean-Louis Dumas of Hermes and, until his death earlier this year, Edouard Michelin. The remaining three members of the supervisory board are former senior managers at PSA. These members ensure that sufficient sector-specific knowledge is represented on the board and they are also familiar with the company from an in-house point of view.
The management board consists of three members, the CEO and the directors of Peugeot and Citroën respectively.
The distribution of tasks between the supervisory board and the management board is sharply defined. The supervisory board does not interfere with day-to-day management, but limits itself to the appointment and possible removal of the management board, the representation of all shareholders and the control of the management board's decisions and actions. The supervisory board also ensures that the strategy pursued by the management board complies with the group's long-term vision, as defined by the supervisory board.
Thierry Peugeot compares the distribution of tasks to a motorway, where members of the management board are the only drivers present. This means they have as much room as they need. In order to drive alongside the motorway, though, the management board needs the approval of the supervisory board.
For the Peugeot family, autonomy of the company forms one of the absolute underlying principles. If the management board ever wishes to call this autonomy into question, they need to gain the approval of the supervisory board. The supervisory board must also grant prior approval for capital operations, the issuing of bonds, the conclusion of major agreements with other companies and for all operations that substantially affect the activities or structure of PSA Peugeot Citroën.
The distribution of tasks referred to above does not alter the fact that a good, collaborative relationship between the chair of the supervisory board and the CEO are of paramount importance. As a result, Thierry Peugeot's office is located next to that of the CEO and they meet at least once every week.
The family at work within PSA
No limits exist with regard to the roles in which members of the Peugeot family can be employed in the company. They are assigned to a job that best fits their own individual skills. It goes without saying that as a company employee, they enjoy quite different rights and duties to those of a shareholder and they must not confuse the two roles.
Thierry Peugeot admits that the consequence of employing family members within the company is that shareholders then acquire certain information via those family members, which they otherwise would not have acquired. He has no problem with this, though he can well imagine that it does not always please the senior management at PSA.
Thierry Peugeot made it quite clear that there should be little doubt with regard to the presence of the family within PSA: "We do not intervene in the operations, but we do like to maintain a presence", he explained.
And what if managers who do not belong to the family do not like this situation? Thierry Peugeot was adamant: "if they work in a company that is under family control, they must accept it, otherwise they need to seek work elsewhere".