Nestle chairman to step down early after CEO ouster

REUTERS/DENIS BALIBOUSE / 2024

A Swiss flag flutters on the headquarters of Nestle in Vevey, Switzerland.

ZURICH >> Nestle said on Tuesday its chairman Paul Bulcke would hand over to former Inditex CEO Pablo Isla on Oct. 1, accelerating a changing of the guard at the Swiss food giant after an unprecedented period of managerial turmoil.

The decision comes just two weeks after Laurent Freixe was abruptly fired as CEO over an undisclosed relationship, and clears the way for new CEO Philipp Navratil and Isla to take full charge of the company that has struggled in recent years as sales growth stalled and debt rose.

Questions were raised about Bulcke’s position by analysts and shareholders following the revelations about Freixe’s romantic relationship with a subordinate, which led to his ouster just a year after he had taken the reins at the maker of KitKat chocolate bars and Nescafe coffee.

Handover moved forward by six months

In a brief statement, Bulcke said the Vevey-based company was well positioned for the future as he moved forward the handover that had previously been scheduled for April next year.

“This is the right moment for me to step aside and accelerate the planned transition,” Bulcke, who will take on the role of ‘honorary chairman’, said in a statement, adding the new leadership would bring a “fresh perspective”.

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Investors and analysts have said incoming chair Isla showed strong leadership at Zara owner Inditex.

Nestle faces a stern challenge with investors and analysts urging it to slim down in a tough consumer market as rivals cut costs and even break up to improve their performance.

Sales growth has stalled, the company’s shares have lost over 40% since 2022 and costs have ballooned. Debt levels have climbed past those of rivals such as Unilever.

Nestle said in June that Bulcke would step down next year, a move that followed rising investor unease over the firm’s share price performance, leadership issues and concerns that its corporate governance model was out of date.

Bulcke’s shareholder backing had also been declining.

In April, he was re-elected with 84.8% shareholder support, below the level chairs usually get in Switzerland. In 2017, he received almost 96% backing.

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