(Bloomberg) -- French semiconductor firm Soitec sank as much as 17% after the board blindsided investors with the announcement of a new chief executive officer, prompting senior management to take the unusual step of publishing a letter decrying the selection process and questioning the chairman’s judgment.
The board of Soitec said in a statement Wednesday night Pierre Barnabe, currently senior executive vice president of big data and cybersecurity at Atos, would replace Paul Boudre. Chairman Eric Meurice said in the statement that Barnabe, 51, “would lead Soitec through the next chapter of ambitious growth.”
Forty-five minutes later, public-relations firm Havas circulated a letter signed by the Soitec executive committee deploring the process for naming a replacement for Boudre.
Soitec hadn’t previously disclosed publicly that it was seeking a replacement for Boudre, 63, who hasn’t announced plans to step down. Since he took the top job in 2015 the shares gained more than 1000% through Wednesday as the company turned profitable and rode a wave of demand for the smartphones that use its technology.
The executive committee, whose members were not named in the letter, wrote:
“It is incomprehensible for the executive committee of Soitec that the succession plan, implemented by the chairman of the board of directors, was organized in such haste and in total opacity, without involving the CEO in the recruitment process and without consultation with the members of the executive committee, without serious consideration of internal candidates, who have been identified and prepared since 2018, thus going against all the rules of good governance.”
A spokesman for Bernin, France-based Soitec declined to comment on the letter. A call to Atos for comment from Barnabe wasn’t immediately returned.
One investor that wasn’t in the dark was the French state, which has two seats on the board and owns 10.35% of Soitec through BPI, the public investment bank. Its director, Nicolas Dufourcq, said Thursday morning in an interview on the BFMBusiness television program that the bank had met Barnabe and voted for him to succeed Boudre.
“Paul Boudre had done a really good job, but reached the age limit, so it is completely normal for the board to raise his succession,” said Dufourcq. “A headhunter was hired, candidates where selected, and the board decided in a normal way.”
He also defended Soitec’s chairman. The executive committee’s letter said Meurice “bears a serious responsibility for the possible destabilization of a growing company and its governance, in a sector identified as strategic by the French state.”
“This ad hominem attack on the chairman of the board is totally inadmissible,” Dufourcq said.
Other investors were trying to make sense of the announcement. Trion Reid, analyst at Berenberg Bank, said the current CEO was responsible for turning around the company from making losses to rapid growth.
“No reason for Mr Boudre’s departure is given and we await comment from him or the company,” he wrote in a note. “We see this news as disappointing.”
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