Sources had told Reuters that representatives of the French state on the utility's board had decided to vote to oust Kocher. .

Engie needed to clarify its strategic options and boost its business model in reneweable energies and client solutions, the group said in a statement.

Kocher's ouster at the helm of France's former gas monopoly follows months of boardroom infighting that has transfixed French business and political circles. Kocher is France's only female boss of a blue-chip company, but has also faced criticism of her record as CEO, including her decisions to sell off some gas and coal assets, which led to internal disagreements.

"Following a decision-making process based on a detailed assessment of her tenure, the board of directors concluded that the further development of the group's strategy required a new leadership," the statement said.

"The board decided not to propose the reappointment of Isabelle Kocher at the next shareholders meeting. This will bring an end to her Chief Executive position," it said.

Kocher has defended her record in newspaper interviews, pointing to a gradual rise in the stock price in recent months, and denouncing a "negative campaign" against her.

Chairman Jean-Pierre Clamadieu told Les Echos newspaper in an interview released after the board meeting that Kocher "did not manage to demonstrate that she was the right person to deepen the group's transformation."

The board also believed that the company had fallen behind in electricity generation and gas infrastructure businesses, which are 80% of Engie's profits.

Clamadieu will be assigned to finding the group's next leader and General Secretary Claire Waysand was appointed interim chief executive officer.

To ensure the transition, operational management will be handled collectively by Chief Operating Officer Paulo Almirante, Chief Financial Officer Judith Hartmann and Waysand.

The French state has a 24% stake in Engie, formerly known as GDF Suez, and holds three direct and indirect seats on the board, which comprises 13 members excluding Kocher's seat. It voted on Thursday on whether to give Kocher a second mandate after her first one expires in May.

While Kocher has faced criticism, there have also been public campaigns in her defence, including by France's green party or left-leaning politicians.

The government, however, believes Kocher has destroyed value during her tenure by selling assets at too low a price, a person familiar with the government's thinking said.

French Finance Minister Bruno Le Maire said he hoped the board would quickly find a new CEO whose mission will be to "set a clear industrial strategy and accelerate the group's businesses to contribute to the energy transition."

LAGGING SHARE PRICE

Engie groups together a hotchpotch of businesses with few synergies between them, from a labour-intensive energy services arm to a capital-intensive gas infrastructure unit, and a fast-growing renewables division.

It also has a legacy nuclear arm in Belgium, which plans to phase out atomic energy.

"The group must also address critical challenges in Belgium and France, namely how nuclear energy fits into the Belgian energy mix and natural gas in the French one," the board said.

Fund investors have long said that the best way to unlock value at Engie would be to break up what they see as a conglomerate or at least to take its infrastructure and renewable energy assets public separately.

Kocher has repeatedly opposed splitting up the firm since she took up the job in 2016.

But she has presided over disposals that did not always have wide support internally, including the sale of liquefied natural gas assets to Total in 2017, and rubbed some Engie executives the wrong way by only communicating some decisions at the last minute, sources familiar with the situation said.

One major criticism is that under Kocher's mandate Engie's share price https://fingfx.thomsonreuters.com/gfx/mkt/13/1830/1799/engie.png performance has lagged that of European rivals like Enel or Iberdrola which have roughly doubled in the past four years while Engie rose only about 15%.

(This story removes extraneous words from first paragraph)

By Benjamin Mallet and Michel Rose