Not only is Bouygues a lot larger, it’s also a lot more Anglo-Saxon. According to Poupart-Lafarge, around 26% of its shareholder base at the end of 1997 comprised US or UK shareholders; by the end of last year, that had increased to nearly 40%. As at other European companies experiencing a similar change, says Poupart-Lafarge, “it’s a trend that’s had a major impact on our corporate governance and on our communications with the financial community.” On the positive side, he cites the faster publication of Bouygues’ financial statements (annual results, for example, are now announced in February, a month earlier than previously) and better governance, in terms of having a range of board-level committees focusing on ethics, remuneration and the like. On the negative side, there’s “the excessive reaction to quarterly results” and the over-emphasis on short-term strategies.
The impact of these changes is all the more powerful when taken in the context of the declining role that banks and the French state now play in Bouygues’ finances. While the amount of debt as a percentage of overall capital funding has always been around 40% over the years, syndicated bank loans comprised most of that debt in late 1997. Only 18% was raised by direct market issues, compared with 92% at the end of 2007. Meanwhile, the use of export credits backed by the French government has now largely been replaced by private project financing, making access to funding less politicised than in the past.
Poupart-Lafarge’s success in steering the company through these changes will be high on the list of legacies that he leaves behind. But Philippe Marien, his former deputy who’s now Bouygues’ new CFO, won’t be able to rely on his old boss’s blueprint as much as he might wish. Poupart-Lafarge reckons that his successor will need to have a new investor strategy soon, focusing more on the east than the west. The reason? “European companies are becoming more and more ‘emerging market’ companies,” says Poupart-Lafarge. “We are going to produce our products in low-cost countries, we are going to sell our products in low-cost countries and tomorrow our shareholders are going to be emerging market shareholders.”
As he explains, “Today our main shareholders are Anglo-Saxon, but tomorrow they will be Chinese, Indian, Arabic and probably Russian.” Unlike American investors, these “new world” investors will show more interest in the role that companies such as Bouygues can play in developing their national economies. “Our investor relations will have to adapt,” he observes.
The lessons Poupart-Lafarge hopes that Bouygues’ new CFO can apply in 2008 were learned during previous market and economic maelstroms. “We learned a great deal from the 1995 property crisis and the 2000 internet bubble,” he says. “On both occasions, the CFO had to keep his cool.” He reckons this is one of the reasons why Bouygues has not been directly affected by the subprime lending problems faced by other construction and property companies.
Over and Out
The longevity of Poupart-Lafarge’s CFO tenure is itself remarkable. Even back in 1998, it would have been hard to imagine any CFO, or aspiring CFO, who could expect to remain finance chief for as long as he did. What’s more, finance churn has been accelerating, as CFOs leave their jobs — either voluntarily or by force — more frequently than they once did. According to executive search firm Heidrick & Struggles, the average tenure of a CFO at a Fortune 1,000 firm is less than three years. Five years ago, it was five years. As Poupart-Lafarge himself notes, the job of a CFO is becoming both bigger and harder, making it a riskier career proposition. The only way around it, he says, is to remember the maxim, “A CFO is only as good as his or her team.”
What does he have planned now that he’s waved goodbye to his team at Bouygues? Having attended his final AGM at the company last month, he says he’s now working on two projects: helping to improve accounting governance in France as a member of the country’s standards-setting board and becoming a “business angel” for young entrepreneurs. He also now has more time to devote to building up his collection of 16th- and 17th-century books, not to mention keeping up with his family, comprising five children and 14 grandchildren.
For the new generation of CFOs wondering whether they’ve made a smart move going for the top job, Poupart-Lafarge has encouraging words: “If I could turn back the clock, I would do the same again.”
Janet Kersnar is editor-in-chief at CFO Europe.