Stockholm (NordSIP) – In a change of pace from the recent conflicts between activist investors and energy companies, AP7 joined a coalition of sustainable 19 investors led by the Ethos foundation and with the support of FrenchSIF to file a shareholder resolution at TotalEnergies’ Annual General Meeting calling for the separation of the functions of Chair of the board and CEO, which are currently held by one and the same person.
This institutional arrangement used to be the norm in France in the post-World War II era, where the role was known as Président Directeur Général (PDG). Although it is not surprising to find this amalgamation of roles in a French company originally founded in 1924, it creates an issue of conflict of interest, where the board cannot be unbiased in its assessment of the company’s management.
TotalEnergies is requested to cease the combined role of Chair and CEO. The proposal will be put up for an advisory vote at the AGM on 24 May. “If the proposal receives a high level of shareholder support, it will be a strong message to the company to review its governance model to ensure a better balance of responsibility and control,” AP7 says.
The separation of the roles is a fundamental principle of AP7’s ownership guidelines and is widely regarded as a matter of good corporate governance. “The concentration of power to a single person increases the risk of conflicts of interest since the board of directors’ possibilities to ensure the shareholders’ interests in the company’s operations are weakened,” AP7 adds.
“The combination of the Chairman of the Board of Directors and Chief Executive Officer roles at TotalEnergies, coupled with the absence of structural guarantees allowing the Lead Independent Director to perform his functions independently, makes dialogue between the Company and its shareholders particularly challenging,” the supporting statement to the proposal says.
“Good corporate governance is particularly important for an oil and gas company such as TotalEnergies given the company’s size and the sector’s central importance to achieving global climate goals. Separation of the functions of CEO and Chair of the board can strengthen the dialogue between investors and the board on climate and transition issues,” AP7 says.
