Chairman's message
"This ability to reconcile renewal with continuity is an indicator of continued success and a sustainable future for Sodexo."
On September 1, 2004, following discussions with the Nominating Committee and the Board of Directors, we decided that the position of Chairman and Chief Executive Officer, which I had held since founding Sodexo, would be separated into two positions-Chairman of the Board of Directors and Chief Executive Officer-and that Michel Landel would be appointed Chief Executive Officer, effective September 1, 2005.
We took advantage of this transition year to transfer responsibility for all the Group's operating entities and functions to Michel and to define the respective duties and powers of the CEO and Chairman.
This new organization offers two advantages:
1. It strengthens the role of Group senior management.
Michel and an expanded and reinforced management team developed Sodexo's Ambition 2015, in consultation with the top 400 senior managers from around the world, and expressed a clear vision “to become the premier global outsourcing expert in quality of life services.”
He recommended to the Board of Directors that we set a new objective of doubling revenues and clarified our strategy around strengthening our leadership in Foodservices, accelerating our development in Facilities Management and achieving global leadership in Service Vouchers and Cards.
Obviously, there are still many challenges ahead, including adapting to meet the new needs of our clients, constantly improving our competitiveness, standardizing best practices, nurturing our human resources and promoting the Sodexo brand around the world. But already, since his appointment as CEO, Michel has provided the Group with a new vitality and momentum.
2. Moreover, since I am now able to focus exclusively on my role as Chairman, the Board of Directors is operating more smoothly and we have improved our corporate governance practices.
During the assessment of Board operating procedures, led by one of its members in fiscal 2003-2004, a number of suggestions were made.
Directors wanted to modify the Board's membership to more accurately reflect the Group's international scope and to integrate new skills and expertise. In response, and in line with recommendations made by the Nominating Committee and the Board, shareholders at the Annual Meeting on February 8, 2005 elected Patricia Bellinger, Robert Baconnier and Peter Thompson as Directors.
As a result, the Board now comprises:
- 4 different nationalities (French, American, British and Canadian).
- 4 women out of 14 directors; this represents nearly 30% of the Board's membership, a record for companies listed in the SBF 120 index, which average less than 10% of women on their boards.
Board members also said that they wanted to play a more active role in the Group's operations. Consequently:
- the Board now meets at least 6 times a year and each meeting lasts a full day.
- the Audit Committee meets at least 4 times a year and its Chairman meets regularly with the Chief Financial Officer, the Internal Audit Senior Vice President and the Statutory Auditors.
- the Compensation Committee meets 3 times a year.
- the Nominating Committee generally meets twice a year.
Some of the past meetings were held outside France and included tours of client sites and meetings with employees, among them:
- a tour of the Bronzefield correctional facility in the United Kingdom by members of the Private Finance Initiative and the Audit Committees, and a meeting with Sodexo United Kingdom and Ireland senior executives.
- a three-day trip to the United States by the Board, during which members visited Mary Washington Hospital and the offices of the World Bank and met with Sodexo North America senior executives.
Board members also requested that meetings be held on specific topics and with Group executives on a regular basis. Since then, a number of senior operational executives have met with the Board to present their businesses, results and plans:
- September 2004 -Pierre Henry, Group Chief Executive Officer, Service Vouchers and Cards.
- May 2005 - Philip Jansen, Group Chief Executive Officer, Food and Facilities Management services, United Kingdom and Ireland.
- March 2006 - Richard Macedonia, Group Chief Executive Officer, Food and Facilities Management services, North America.
Other members of the Group's Executive Committee and the Operating Committee have made special presentations to the Board:
- Elisabeth Carpentier, Group Executive Vice President, Human Resources, on the Group's human resources strategy, initiatives and performance monitoring.
- Philippe Taillet, Group Senior Vice President, Information Technology, on the Group's IT strategy and applications for improving performance.
- Damien Verdier, Group Executive Vice President Marketing, on the Group's purchasing strategy and the Five Star action plan to enhance competitiveness.
We will be conducting another assessment of Board operating procedures. Already for this year, we intend to increase the number of exchanges between Board members and senior executives.
Finally, given the Board's heavier workload, it seems reasonable to ask for an increase in Directors' fees, which are considerably lower than the average paid by large French-based companies.
Succeeding the founder is not always easy, but the Nominating Committee, the Board of Directors and I knew that Michel Landel had all the necessary qualifications to be the CEO, not only professionally speaking but also because he embodies the Group's values, instilling them within each Sodexo subsidiary he has managed over the past 22 years. Today, looking back over the past 16 months, the Board of Directors and I feel that the transition is a complete success and we are pleased at how smoothly the Group's new organization is functioning.
This ability to reconcile renewal with continuity produced good results in Fiscal 2006 and is an indicator of continued success and a sustainable future for Sodexo.
Pierre Bellon
Chairman and Founder,
Sodexo
million
