PARIS: Some LVMH shareholders are seeking clarity on how and to whom Bernard Arnault plans to hand over leadership of the luxury giant he has been steering for almost 40 years, saying the lack of transparency is increasingly becoming a risk for the group.
Arnault, who oversees the US$350bil group spanning over 70 brands, including Dior and Tiffany, has five children involved in the running of his luxury empire but has shown no sign of wanting to retire. At 76, he has yet to pick a successor.
Questions have long swirled in corporate Europe about who will succeed Arnault, France’s richest man who last April extended the age limit for his combined chief executive officer and chair role for a second time, to 85.
In the strongest public comments to date on the issue, some of LVMH’s shareholders said the unresolved succession issue has become a liability for the company.
“The succession planning, as of now, appears unclear and opaque,” said Stefan Bauknecht, equity portfolio manager at Deutsche Bank’s DWS, LVMH’s 12th-largest shareholder according to LSEG data.
“We want more transparency and a plan on how things will evolve.”
Ariane Hayate, European fund manager at Edmond de Rothschild in Paris, which holds LVMH stock, said: “A decade ago, succession was not a pressing issue. Today, it has become a risk factor and leads to a governance discount on the company.”
LVMH, which is due to report annual results today, said in detailed responses to Reuters’ questions that succession plans for its executives aren’t public, but “obviously they do exist”, without referring specifically to Arnault’s role.
Investors said the latest age extension appeared to be an attempt to buy Arnault time to decide.
“They (LVMH) probably can’t give the clarity because he doesn’t have clarity in his own mind,” said Paul Moroz of Mawer Investment Management, another LVMH investor. “You really don’t know until it’s done, but it’s probably low odds it works out.”
Arnault has indicated the subject is not top of his agenda.
“Talk to me again in 10 years, I can give you a more precise answer,” he told CNBC in December. — Reuters
