Corporate Governance Trends for SBF 120 and CAC 40 Companies: 2021-2022

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In our 12th annual French boards study, Russell Reynolds Associates analyzed the boards of directors in CAC 40 and SBF 120 companies. Here are some of the key findings.

Read the Complete Study in French here

In 2022, the governance bodies of SBF 120 and CAC 40 listed companies have turned the page on the Covid crisis. In addition to a clear increase in the number of women on management bodies and a boom in corporate social responsibility (CSR) concerns addressed by boards of directors, the frequency of board meetings has returned to pre-crisis levels. As for directors' compensation, it is still struggling to catch up with other major European countries.

Now a legal obligation, the number of women on SBF 120 and CAC 40 company boards and executive committees continues to rise

There has been a large increase in the number of women on executive committees over the last five years

Between 2013 and 2022, the proportion of women on CAC 40 company executive committees (ExComs) rose from 8% to 26% on average. Fifteen companies’ management boards are now comprised of more than 30% of women, and four companies (Vivendi, Orange, Schneider Electric and Legrand) have over 40%.

Although there has been a steady increase over the past three years, parity in functional and operational responsibilities has not yet been achieved: women leaders hold 42% of operational positions in CAC 40 ExComs, and only 30% of the SBF 120 outside the CAC 40.

Furthermore, within CAC 40 companies, 42% of the women appointed to ExComs in 2021 and 2022 were nominated under an ExCom expansion process (32% to replace a man).

Clear confirmation of women’s place on boards of directors

With nearly 45% of women in CAC 40 companies, France remains the European champion for "women on boards," outpacing Switzerland (34%), Finland (37%) and Germany (37%).

The increased presence of women on boards is reflected in SBF 120 companies as well: 111 of them are now comprised of more than 40% women on their boards (compared to 105 in 2021) and 19 SBF 120 companies have a majority of women on their boards, which is 90% higher than in 2021.

In this respect, Engie, BNP Paribas and Vivendi – companies that have made a long-term commitment to increasing the number of women on their boards – are examples that bolster the whole index.

In addition, women are taking on more responsibilities on boards.

• The SBF 120 now has 11 women board chairs, up from four in 2018.
• 50% of CAC 40 board committees are chaired by women; the figure peaks at 92% for CAC 40 committees dedicated to CSR, illustrating the overrepresentation of women in this area.

An explosive entry of CSR in the concerns of SBF 120 boards

Corporate social responsibility continues to be a key concern for CAC 40 boards. In 2021, 88% of CAC 40 companies had a committee that addresses CSR (85% in 2020; 75% in 2019); of these, 34% work with dedicated CSR committees.

• In 2021, five CAC 40 companies had no dedicated CSR committee on their board. However, this does not mean that they do not address CSR issues under governance.

• One third of CAC 40 company committees at re not exclusively dedicated to CSR do work with "Strategy & CSR" committees

The changing CEO profile: more female and more international

In 2022, there were 15 women CEOs running SBF 120 companies (12.5%) compared to 12 in 2021 and only nine in 2020. Additionally, there are four women chairs of SBF 120 companies.

In 2022, the SBF 120 has 14 newly appointed CEOs. Their profiles vary: 43% come from outside the company, compared to only 13% in 2020-2021, and four were members of the board before becoming CEO (Christel Heydemann at Orange, Sophie Bellon at Sodexo, Christophe Périllat at Valeo and Bernard Gault at Elior).

We also observe an internationalization of CEOs (19% in 2022 vs. 15% in 2020). This increased diversity is explained by new companies joining the SBF 120: Solutions 30, Valneva, Quadient and ALD.

In addition to nationality, our study shows that the majority of CEOs are graduates from French business schools (58% in the SBF 120; 65% in the CAC 40). A notable amount also attended engineering schools (30% of CAC 40 CEOs are graduates of Polytechnique, 8% of them attended ENA – the venerable National School of Administration). On the other hand, an MBA does not seem to be a decisive criterion for becoming a CEO: only 20% of SBF 120 CEOs hold this type of advanced degree.

Finally, the Covid crisis has accelerated board-initiated succession planning. In 2021and 2022, 29% of SBF 120 CEO departures were the result of replacement before the end of their term (8% in 2018-2019 and 6% in 2017-2018).

Following the trend set by SBF 120 companies, the CAC 40 is beginning to separate board chair and CEO functions

Since 2020, the CAC 40 began to follow a trend already established within SBF 120 companies —separating board and CEO functions. Today, 72% of CAC 40 companies have adopted this role division, compared to 45% in 2017.

55% of SBF 120 board chairs are not former CEOs of the company

• 35% of SBF 120 chairs have already held the same role in another listed company.
• Of all the chairs of SBF 120 companies, 30% have already had experience as CEO in another listed company.
• Of the CEOs who are not former CEOs of their current company, 19% have had CEO experience with another publicly traded company.
• Among the 29 family-owned companies in the SBF 120, 59% of board chairs are from the family (28% of them are also CEOs).

A return to normalcy post-Covid for boards of directors

The average number of board meetings in 2021 have returned to 2019 levels (9.3 meetings in 2021 for CAC 40), after a sharp rise in 2020 (11.9 meetings for CAC 40), in connection with the Covid crisis.

The proportion of independent directors remains steady and 55% of independent directors are women.

In 2021, 42% of CAC 40 directors sit on one single board and only 8% sit on 4+ boards

Finally, directors' compensation in France is still struggling to catch up with other major European countries, with an average remuneration of EUR 90.2K p.a. in 2021 in CAC 40 companies (vs. EUR 86.7K in 2020). In relation to the number of board meetings, the average compensation is EUR 9,700.