The World’s Richest Person Auditions His Five Children to Run LVMH, the Luxury Empire
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The World’s Richest Person Auditions His Five Children to Run LVMH, the Luxury Empire

Bernard Arnault drilled his offspring in math when young, assigned them company roles and mentors as adults, then made them joint owners of a firm empowered to run the luxury conglomerate

Thu, Apr 20, 2023 8:36amGrey Clock 10 min

PARIS—Once a month, Bernard Arnault gathers his children for lunch inside a private dining room at the headquarters of LVMH Moët Hennessy Louis Vuitton SE, his globe-spanning luxury goods company.

The meal, which lasts exactly 90 minutes, begins with the French billionaire reading aloud discussion topics he has prepared on his iPad, according to people close to him. Mr. Arnault then goes around the table, asking each of his five adult children for advice. He’ll seek an opinion on specific managers at the company, the people said, or whether it’s time for a shake-up at one of LVMH’s myriad brands, which stretch from the Champagne vineyards of France to handbag-making workshops in Italy and Texas.

Mr. Arnault, 74, currently the world’s richest person, has spent decades grooming his children to run LVMH. He drilled them in mathematics growing up and brought them along on business trips and negotiations. Today, Mr. Arnault is tightening the family’s grip on LVMH, parachuting his children into senior roles and empowering them to one day take over the luxury empire.

In elevating his children, however, Mr. Arnault has also amplified a long-running dilemma: Who will succeed him as chief executive and chairman of the world’s biggest luxury conglomerate? Mr. Arnault built LVMH, valued at $480 billion, by hunting rival luxury firms for corporate takeovers while also nurturing generations of fashion designers. That combination of killer instinct and finesse is why his rivals call him the “wolf in cashmere.”

His eldest child, Delphine Arnault, 48, appeared to many in the fashion world to pull ahead of the pack in January when her father made her chief executive of Christian Dior, the second-largest brand in the group. Paris was also buzzing weeks earlier when her brother Antoine Arnault, 45, became CEO of the listed company that holds the family’s stake in LVMH.

Nipping at their heels are the three sons from Mr. Arnault’s second marriage. Alexandre Arnault, 30, is the executive vice president of Tiffany & Co., with a high-powered network that includes Jay-Z and Twitter co-founder Jack Dorsey. Frédéric Arnault, 28, runs the Tag Heuer watch brand, while 24-year-old Jean Arnault is director of marketing and development at Louis Vuitton’s watches division. All three studied at top engineering schools, a qualification their father has called crucial to his own success.

Mr. Arnault has given no indication whom he will choose as his successor, saying only that it will be based on merit. When asked about the matter in January at a presentation of LVMH’s annual results, he drew a parallel between his recent decision to raise the retirement age of LVMH’s chairman and CEO to 80 and French President Emmanuel Macron’s contentious push to raise France’s retirement age to 64.

“As to succession, you may also have noticed that the retirement age—which is very much in vogue—has been extended,” he said.

With his children looking on from the front row, Mr. Arnault quipped that he could use some free time to hone his skills at tennis, his favourite sport. “The last time I played with Roger Federer, I think I won one point in a single set. Maybe I could do a bit better than that,” he said.

Mr. Arnault pulled ahead of Tesla CEO Elon Musk late last year as the wealthiest person on the planet, according to the Bloomberg Billionaires Index. His wealth was $208 billion on April 19, according to the index.

For decades, Mr. Arnault has run the company with top lieutenants such as Sidney Toledano, who led Christian Dior, and Michael Burke, chief of his biggest brand, Louis Vuitton.

Mr. Burke, 66, stepped down from Louis Vuitton in January to be with his wife before she died from cancer. Mr. Toledano, 71, is expected to give up his role running a stable of the group’s fashion brands, including Celine, Loewe and Marc Jacobs, in the coming months.

Both played key roles in mentoring Mr. Arnault’s children. He tends to pair them with executives who keep an eye on their performance. He will then ask, Mr. Toledano said, “about some of their character traits, or if there’s a need for a little correction.”

Delphine Arnault worked for 12 years at Dior under Mr. Toledano. She then joined Louis Vuitton in 2013, paired with Mr. Burke, who has long worked at her father’s side. Speaking at a farewell tribute for Mr. Burke in January, according to people present, she said it was “impossible to recall precisely my first memory of you. That’s quite logical after all because I’ve known you since I was born.”

Days later, Ms. Arnault attended Dior’s fashion show in Paris as she prepared to take over as the brand’s chief executive. She has an uncanny resemblance to her father, possessing his genteel manners, high forehead and a frame that is tall and slender.

She went backstage, where she offered an assessment of the handbags that had just gone down the runway. Glossy materials, she said, were making a comeback. The collection, she said, was “very elegant. A bit romantic.”

Mr. Toledano looked on like a proud dad. “She survived the Toledano-Michael tandem,” he said. “She’s vaccinated now. She’s received the two doses.”

Mr. Arnault hardly ever speaks about succession in public. People close to him say it has been on his mind for decades.

In 2003, he made a hospital visit to his close friend and tennis partner Jean-Luc Lagardère, who had undergone a hip operation, the people said. Mr. Lagardère was one of France’s most respected businessmen, having built an empire that included missile-maker Matra and publisher Hachette.

Two days later, Mr. Lagardère slipped into a coma after developing an infection, and died shortly thereafter. The executive, who was 75, hadn’t adequately prepared his succession. In the years that followed, his son Arnaud gradually sold off or relinquished what his father had built.

Mr. Arnault recently took steps to tighten his family’s grip on LVMH and pass it on.

In December he transformed Agache, the private holding company that ultimately controls LVMH, into a commandite, a French corporate structure that resembles a limited partnership and allows its controlling shareholder to wield significant power with a relatively small holding.

He also created a second entity, Agache Commandite SAS, that is owned by his five children, each with a 20% stake, according to France’s stock market regulator. The new company is empowered to take over the running of Agache and effectively end Mr. Arnault’s leadership of the company. Major decisions, such as dissolving Agache, require unanimous approval from his children.

The new company has a rotating two-year chairmanship among the children, who can’t sell their shares in it for 30 years without unanimous board approval. Once that period lapses, only direct descendants of the elder Mr. Arnault will be able to hold the shares.

One businessman who has known Mr. Arnault for decades compared the situation to Jean-Paul Sartre’s play “No Exit,” where the main characters are locked in a room together for eternity as punishment.

Mr. Toledano said he was confident the Arnault children can work through any disagreements because their father taught them from a young age to put the interests of the company first. “For now, they all get on great,” he said.

The children all consider themselves siblings and don’t refer to one another as a half brother or half sister, according to people familiar with their relationship. They are careful not to create any appearance of rivalry or conflict, these people said, adding that the five would never discuss or joke about who was best at something like tennis or piano—their father wouldn’t stand for it.

Mr. Arnault is “above all a pragmatic man,” Mr. Toledano said. “You have to choose whoever is best at a given point in time considering the challenges. It’s what he does with his managers, his advisers, and I think it’s what he’ll do with his children.”

It isn’t a given that LVMH’s future leader will be one of Mr. Arnault’s children, according to Mr. Toledano. “At no moment did he tell me, ‘I must prepare my children for my succession,’” he said.

Bernard Arnault was born in 1949 in Roubaix, near the Belgian border. His father, Jean Arnault, was a manufacturer and owner of the civil engineering company Ferret-Savinel.

He excelled at school and earned a spot at the Ecole Polytechnique, a highly selective engineering and science school that has shaped the elite since the French Revolution. Napoleon Bonaparte turned Polytechnique into the military academy it remains to this day.

Mr. Arnault and the 312 other students in his class would wake at 7 a.m. to a bugle and a flag-raising. He learned to march wearing the bicorne hat of the Napoleonic era that students don each year as they proceed down the Champs-Élysées in the Bastille Day parade.

Mr. Arnault recalled in a book of interviews with a French journalist how his education at Polytechnique helped lay the foundations for his conquest of the fashion world. “It is above all a program that gives you a rational mindset, which allows you to analyse a situation or a problem very quickly,” he wrote, adding that LVMH makes a point of recruiting young talent from the school.

Antoine Arnault was more blunt about his father’s esteem for the school. In an interview with Le Monde, the contents of which were confirmed by a spokesman, the eldest son recalled how hard it was to tell his father he wasn’t Polytechnique material. Neither he nor his sister attended the school.

“For him, only Polytechnique counts,” he added.

Mr. Arnault had Antoine and Delphine with his first wife, Anne Dewavrin. As a young father, he took a rigorous approach to his children’s education. They recount how he would call them into his office and drill them on math exercises in between business meetings.

Mr. Arnault moved his family to New York in the early 1980s after the Socialist leader François Mitterrand was elected president of France and vowed to tax the rich heavily. He spent two years in the U.S. building the business he had taken over from his father.

Returning to France in 1984, Mr. Arnault made his first move into the luxury business, gaining control of a textile company called Boussac Saint-Frères that was near bankruptcy. Tucked within it was a jewel: Christian Dior.

Dior became the archetype of Mr. Arnault’s budding empire. The haute couture house had redefined womenswear in the mid-20th century with the “new look” dress, and Mr. Arnault aimed to emphasise that fashion pedigree through aggressive expansion.

He sent Delphine in her early 20s to work at the namesake fashion house of John Galliano, a star designer who was also creative director of Dior. Mr. Toledano then took her under his wing at Dior. The executive recalled huddling with Delphine and her father before making the pivotal decision to fire Mr. Galliano after he was filmed making antisemitic remarks.

Mr. Arnault divorced in 1990 and later that year met Hélène Mercier, a Canadian concert pianist, at a friend’s house. Driving her home, Mr. Arnault told her about his struggles learning to play a collection of études by Frédéric Chopin. When they met again, for tea at Mr. Arnault’s, she asked him to play Chopin for her.

“He was shaking all over with stage fright but seemed determined to go all the way,” she recalled in her autobiography. “I felt that Bernard was suffering, that he was doing violence to himself to move me.”

The couple married and had three boys. People close to the family say Mrs. Mercier-Arnault applied the same drive to parenting that made her a famous pianist. She pushed her boys in music and in school, waking them at dawn to rehearse and study.

Mr. Arnault also threw himself into their studies. Mr. Toledano recalled a flight he took with Mr. Arnault back to Paris after a particularly gruelling trip to Asia. Mr. Arnault, operating on just a few hours’ sleep, pulled out a mathematics textbook and began to study. One of his younger sons was about to take the entrance exam to Polytechnique.

“I need to refresh my memory,” he told Mr. Toledano.

Alexandre Arnault applied to Polytechnique for undergraduate studies but didn’t make the cut. He was later accepted at the school for a master’s-degree program.

At LVMH, he quickly established himself as someone with his father’s ear. When he suggested buying German luggage maker Rimowa, his father told him the brand’s family owners didn’t want to sell. Alexandre wrote to the Rimowa family’s patriarch and traveled to meet with him, according to LVMH executives.

LVMH bought the company in 2017, and Mr. Arnault installed Alexandre as CEO. He gave the brand a makeover by forging collaborations with streetwear-savvy designers. One collection had the Supreme logo emblazoned on luggage. Another had a clear case designed by Virgil Abloh for his Off-White brand.

Mr. Arnault then sent Alexandre to help shake up Tiffany & Co., acquired in 2021 for $15.8 billion. Known for its engagement rings, the jeweler has struggled to gain traction with younger shoppers. Alexandre spearheaded a collaboration between Tiffany and Nike Inc. to make $400 Nike Air Force 1 shoes in all-black leather with a swoosh the color of Tiffany’s classic blue jewelry boxes. Ads proclaiming the brand was “Not your mother’s Tiffany” were plastered across the U.S.

The moves ruffled fashion executives who worried he was tarnishing a prestigious luxury brand. “Why on earth would Tiffany want to move away from that to become just another streetwear brand is beyond me,” said Ana Andjelic, former chief brand officer at Banana Republic.

Mr. Arnault’s two youngest children have hewed most closely to their father’s career track. Both attended a Jesuit high school, where they took literature classes taught by Brigitte Macron before she became the first lady of France.

Frédéric Arnault trained in classical piano and excelled at tennis. He was accepted at Polytechnique, where he took the same courses as his father. He then co-founded an electronic-payments startup, which he sold 18 months later.

In 2018, the elder Mr. Arnault recruited Stéphane Bianchi, an executive who had groomed an heir of the Yves Rocher cosmetics company, to lead LVMH’s watches business. Mr. Bianchi said Mr. Arnault told him from the start to work closely with Frédéric, who at the time was driving TAG Heuer’s digital strategy. Two years later, Mr. Bianchi made him CEO of the brand.

“My father, of course, gives me advice, but he also gives me a lot of freedom,” Frédéric said in an interview. In meetings, he has his father’s tendency to let others do the talking while he studies them, according to Mr. Toledano.

“He looks at you and he absorbs you. Sometimes he lets you talk for 10 minutes while he just absorbs,” he said.

Frédéric has a close relationship with his younger brother Jean, according to people close to them, helping to cultivate the 24-year-old’s fascination with the watch world. Jean went to the Massachusetts Institute of Technology to study financial mathematics. He then earned a master’s degree in mechanical engineering from Imperial College London, writing his thesis on the Tag Heuer carbon balance spring, a component of its watches.

He now works at Louis Vuitton’s watches division, spending much of his time at its factory in Switzerland. In March, he announced plans to relaunch the Gérald Genta brand with the support of the watchmaker’s widow.

In recent years, Mr. Arnault has tapped his children for advice on some of the more delicate issues facing his company. As inflation began to bite last year, fuelling public anger over wealth inequality, Mr. Arnault was worried the public outrage would ripple toward their family and LVMH, according to people close to him.

He went to his eldest son, Antoine, who had been pushing him to communicate more openly with the public about LVMH’s operations, the people said. Antoine suggested LVMH launch an ad campaign publicizing how much the company paid in French taxes last year and the number of jobs it created, the people said. His father took the advice.

This year, Mr. Macron triggered massive street protests with his plan to raise France’s retirement age. Photos of Mr. Arnault began appearing on “wanted” posters at the demonstrations, and protesters stormed into the lobby of LVMH’s headquarters, waving flares and flags. In the days that followed, Mr. Arnault began running his ad campaign in Libération and other leftist newspapers.

The luxury titan also asked his children for advice on how to handle the departure of Mr. Burke from Louis Vuitton, according to people familiar with the matter.

Mr. Burke, who remains an adviser to Mr. Arnault, built Louis Vuitton into a brand with $20 billion in annual sales while navigating personal tragedy. Virgil Abloh, the brand’s creative director for menswear, was diagnosed with cancer around the same time Mr. Burke’s wife, Brigitte, received a cancer diagnosis.

Brigitte Burke and Mr. Abloh bonded over their experience in the months leading up to the designer’s death in November 2021. The designer was a trend-setter in the fashion world. Brigitte was known for bringing employees together for meals.

“She did the cooking. I did the serving,” Mr. Burke said.

Mr. Burke needed to be at his wife’s side before she died in February. Mr. Arnault decided Pietro Beccari, who was CEO of Dior, would take over at Louis Vuitton. Delphine Arnault would become the new chief of Dior.

In late January, Louis Vuitton employees gathered at the Louvre, where the brand had just held its menswear show, for a private tribute to Mr. Burke.

“I’m very touched to be here,” Delphine Arnault told the group, according to people present, as her father and Mr. Burke looked on. One of her earliest memories, she said, was of Mr. Burke’s mustache. She showed them a photo of a young Mr. Burke in the 1980s, adding: “We’ve all learned so much by your side.”


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Why Is Everyone So Unhappy at Work Right Now?

U.S. employees are more dissatisfied than they were in the thick of the pandemic

Wed, Nov 29, 2023 5 min

Americans, by many measures, are unhappier at work than they have been in years.

Despite wage increases, more paid time off and greater control over where they work, the number of U.S. workers who say they are angry, stressed and disengaged is climbing, according to Gallup’s 2023 workplace report. Meanwhile, a BambooHR analysis of data from more than 57,000 workers shows job-satisfaction scores have fallen to their lowest point since early 2020, after a 10% drop this year alone.

In interviews with workers around the country, it is clear the unhappiness is part of a rethinking of work life that began in 2020. The sources of workers’ discontent range from inflation, which is erasing much of recent pay gains, to the still-unsettled nature of the workday. People chafe against being micromanaged back to offices, yet they also find isolating aspects of hybrid and remote work. A cooling job market—especially in white-collar roles—is leaving many professionals feeling stuck.

Companies have largely moved on from pandemic operating mode, cutting costs and renewing a focus on productivity. The disconnect with workers has managers frustrated, and no quick fix seems to be at hand. Those in charge said they have given staff more money, flexibility and support, only to come up short.

The experiences of workers like Lindsey Leesmann suggest how expectations have shifted from just a few years ago. Leesmann, 38 years old, said she soured on a philanthropy job after having to return to the office two days a week earlier this year.

Prepandemic, she would have been happy working three days a week at home. “It would have been a dream come true.” Still, her team’s in-office requirements seemed like going backward, and made her feel that her professionalism and work quality were in doubt. Instead of collaborating more, she and others rarely left their desks, except for meetings or lunch, she said. Negative feelings followed her home on her hourlong commute, leaving her short-tempered with her kids.

“You try to keep work and home separate, but that sort of stuff is just impacting your mental health so much,” said Leesmann, who recently moved to a new job that requires five in-office days a month.

No more honeymoon

The discontent has business leaders struggling for answers, said Stephan Scholl, chief executive of Alight Solutions, a technology company focused on benefits and payroll administration. Many of the Fortune 100 companies on Alight’s client list boosted spending on employee benefits such as mental health, child care and well-being bonuses by 20% over the pandemic years.

“All that extra spend has not translated into happier employees,” Scholl said. In an Alight survey of 2,000 U.S. employees this year, 34% said they often dread starting their workday—an 11-percentage-point rise since 2020. Corporate clients have told him mental-health claims and costs from employee turnover are rising.

One factor is the share of workers who are relatively new to their roles after record levels of job-switching, said Benjamin Granger, chief workplace psychologist at software company Qualtrics. Many employers have focused more on hiring than situating new employees well, leaving many newbies feeling adrift. In other cases, workers discovered shiny-seeming new jobs weren’t a great fit.

The upshot is that the newest workers are among the least satisfied, Qualtrics data show—a reversal of the higher levels of enthusiasm that fresh hires typically voice. In its study of nearly 37,000 workers published last month, people less than six months into a job reported lower levels of engagement, feelings of inclusion and intent to stay than longer-tenured workers. They also scored lower on those metrics than new workers in 2022, suggesting the pay raises that lured many people to new jobs might not be as satisfying as they were a year or two ago.

“What happened to that honeymoon phase?” Granger said.

John Shurr, a 66-year-old former manufacturing engineer, took a job as an inventory manager at a heavy-equipment retailer in the spring in Missoula, Mont., after being laid off during the pandemic.

“It was a nice job title on a pretty rotten job,” said Shurr, who learned soon after starting that his duties would also include sales to walk-in customers.

When Shurr broached the subject, his boss asked him to give it a chance and said he was really needed on the showroom floor. Shurr, who describes himself as more of a computer guy, quit about a month later.

“I feel kind of trapped at the moment,” said Shurr, who has since taken a part-time job as a parts manager as he tries to find full-time work.

Bridging the distance

Long-distance relationships between bosses and staff might also be an issue. Nearly a third of workers at large firms don’t work in the same metro area as their managers, up from about 23% in February 2020, according to data from payroll provider ADP.

Distance has weakened ties among co-workers and heightened conflict, said Moshe Cohen, a mediator and negotiation coach who teaches conflict resolution at Boston University’s Questrom School of Business. He has noticed more employees calling co-workers or bosses toxic or impossible, signs that trust is thin.

Cohen’s corporate clients said their employees are increasingly transactional with one another. Some are coaching workers in the finer points of dialogue, such as saying hello first before jumping into the substance of a conversation.

“The idea of slowing down, taking the time, being genuine, trying to actually establish some sort of connection with the other person—that’s really missing,” Cohen said.

One Los Angeles-based consultant in his 20s, who asked to remain anonymous because he is seeking another job, said that when he started his job at a large company last year, his largely remote colleagues were focused on their own work, unwilling to show a new hire the ropes or invite him for coffee. Many leave cameras off for video calls and few people show up at the office, making it hard to build relationships.

“There’s zero humanity,” he said, noting that he is seeking another job with a strong office culture.

The share of U.S. companies mandating office attendance five days a week has fallen this year—to 38% in October from 49% at the start of the year—according to Scoop Technologies, a software firm that developed an index to monitor workplace policies of nearly 4,500 companies.

Some companies have reversed flexible remote-work policies—in large part, they said, to boost employee engagement and productivity—only to face worker backlash.

Not all the data point downward. A Conference Board survey in November 2022 of U.S. adults showed workers were more satisfied with their jobs than they had been in years. Key contingents among the happiest employees: people who voluntarily switched roles during the pandemic and those working a mix of in-person and remote days. But that poll was taken before a spate of layoffs at high-profile companies and big declines in the number of knowledge-worker and professional jobs advertised.

At Farmers Group, workers posted thousands of mostly negative comments on the insurer’s internal social-media platform after its new CEO nixed the company’s previous policy allowing most workers to be remote.

Employees like Kandy Mimande said they felt betrayed. “We couldn’t get the ‘why,’” said the 43-year-old, who had sold her car and spent thousands of dollars to redo her home office under the remote-work policy. She shelled out $10,000 for a used car for the commute. A company spokesperson said that not all employees will support every business decision and that Farmers hasn’t seen a significant impact on staff retention.

During a brief leave, Mimande realised she no longer felt a sense of purpose from her product-management job. She resigned last month after she and her wife decided they could live on one salary.

She now helps promote a band and pet-sits. “It’s so much easier for me to report to myself,” she said.


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