(Reuters) (Reuters) Unilever (NYSE: UL) announced that its CEO Alan Jope would retire at the end of 2023. making the announcement just a year after the failure of a bid to buy GSK’s business in consumer healthcare and two months following an activist shareholder Nelson Peltz joined the board.
The British consumer goods maker announced on Monday that its board will begin a formal search to find the successor to Jope who assumed his post at the beginning of 2019. The board will be looking at candidates from both the outside and within.
Unilever’s search starts at a time of rising costs for food and energy that affect the budgets of families and affect consumer confidence. The company is looking for an executive who can lead the company while also looking to replace its competitor Reckitt which is the producer of Dettol products, and the Finish soap for dishwashing.
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Unilever is having a difficult beginning to the year, after it made three bids to purchase the consumer health division that is part of GlaxoSmithKline (NYSE: GSK) One bid was with a potential value of fifty billion pounds ($53.14 billion).
The decision was met with a snub from shareholders, many of whom also criticized Unilever for prioritizing sustainability over the core growth of the company.
“This could be a sign of more positive future changes at Unilever,” Tineke Frikee director of the fund at Unilever Investor Waverton Asset Management, said.
“The non-appealing idea of buying consumers’ healthcare products from GlaxoSmithKline has damaged Jope’s reputation therefore a fresh start from an unnamed CEO may convince investors that Unilever’s momentum is heading upwards once more.”
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The company it also revealed plans to reduce approximately 1,500 jobs in management and to restructure its business in order to concentrate on five major product lines, just following the revelation that Peltz through the Trian Partners vehicle, had acquired a stake in Unilever.
Trian said to Reuters via a press release Trian was sad to learn of Jope’s decision to leave the team.
“As as a board member the CEO of Trian Nelson Peltz looks forward to working in close collaboration with Alan until the time of his departure, and to be part of the selection process for an interim leader for Trian,” it added.
A Unilever spokesperson confirmed that it is “fully fully committed to organizational transformations” as well as the spokesperson added that Jope is “completely dedicated to delivering to this strategy.”
“A MIXED BAG”
The shares of Unilever, which were up 1.6 percent on Monday morning are underperforming European consumer staples and discretionary indexes along with most competitors since Jope was named the CEO.
“Our first issue is that it leaves him with 15 months to go until his departure with a CEO who could be perceived as having lost credibility with staff and others.” RBC analyst James Edwardes Jones stated.
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“This comes at a time that Unilever is making and settling down an overhaul of its structure as well as facing a difficult macroeconomic environment.”
A person knowledgeable about the issue confirmed that the company’s “unusual” move to inform the public more than a year prior to when Jope quits stems from fears that the information could have been leaked before it was officially known.
“While this has definitely been an amazing career however, investors will likely think this is an improvement, given that the company has had a difficult time over the past few years in convincing investors it is a good choice for brand and strategy to become an enterprise with a growth rate of mid-single-digits,” Bernstein analyst Bruno Monteyne stated.
Jope has been employed at Unilever for over 35 years. He has held a variety of top leadership positions, including being the head of the division for personal care in 2014.
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“I think that Jope’s tenure as CEO was somewhat of mixed mix … it’s been an impressive career , despite joining as a student in the 1980s, and then becoming the chief executive of one of biggest UK listed companies.” Jack Martin, fund manager at Unilever shareholder Oberon Investments, said.
($1 = 0.9410 pounds)
Graphic: Unilever shares vs rivals- https://fingfx.thomsonreuters.com/gfx/mkt/gkplgrmdxvb/unilever.PNG
