2017 Engagement Case Study: Board Director independence

Orpea is a French-based operator of care homes for the elderly across much of continental Europe. The company has more than doubled its revenues since 2012 when WHEB originally invested in the company. Back in 2012, only 25% of Board Directors were considered to be independent. Over the years that the company has been in WHEB’s investment strategy, we have engaged extensively to encourage the company to appoint a majority of independent Directors to its Board.

Engagement issue
Board Director independence

Engagement Objective
To ensure that the Board is populated with a majority of independent Board Directors.

Scope and process
As a point of policy, when we vote against or abstain on a vote at a company’s general meeting, we always write to explain our reasons. We have written to Orpea many times over the years to express our views on the importance of independent Directors and have met regularly with company management to discuss these issues.

Outcome: Successful
Over the years that Orpea has been in the WHEB investment strategy, the share of independent Directors has risen from 25% to 64%. In 2017, one Director who we had argued was not independent because of a conflict of interest (he also acted as a lawyer for the company), agreed not to stand for re-election ‘due to [WHEB’s] comments and in line with the highest possible standards of governance’.