Retail, consumer CEOs see shorter tenures as boards act more quickly
By Svea Herbst-Bayliss and Richa Naidu
NEW YORK/LONDON, Sept 10 (Reuters) -When two of the most powerful brands in retail and packaged foods last month ousted their CEOs, it signaled corporate boards are more ready to toss top executives before activist investors tell them to act.
The tenure for U.S. retail and packaged goods company CEOs has this year on average been about 7 months shorter than chiefs who were in office in 2024 in the autos, finance, tech and manufacturing industries, data to August 31 from executive compensation research firm Equilar show.
And now, their time in the top job may be shrinking as consumers buying iced lattes, chocolate bars and detergent become pickier, leaving companies with less time to innovate and demonstrate performance. At the same time, corporate directors are quicker to act, bankers, lawyers and academics say, forcing CEOs to deliver quickly or face an abrupt exit.
"There is a fresh lack of patience at the board level," said Jim Rossman, global head of shareholder advisory at Barclays BARC.L. "With the COVID-19 pandemic behind us and some stronger economic data, there is plenty to judge a CEO's management abilities by and if they aren't performing they are out."
Monday marked the first day on the job for Starbucks SBUX.O chief Brian Niccol who replaces Laxman Narasimhan after the board gave him only 16 months on the job. Nestle's Mark Schneider had only 24 hours to digest his firing in the face of a sagging share price after eight years as CEO.
While activist Elliott Investment Management was pushing for a board seat at Starbucks, the board fired the CEO without the hedge fund's input, sources familiar with the events said. At Nestle, which has faced activist pressure before when Third Point pushed for changes, the board again acted without public pressure from a hedge fund.
Consumer packaged goods and retail chiefs to August 31 have held the top job for 7.7 years on average, according to Equilar, which tracks Russell 3000 companies.
This compares with other big industries like finance CEOs who had their jobs 10 years on average, and tech CEOs who lasted nearly 9 years on average, Equilar data shows.
"There is a huge amount of pressure on consumer goods CEOs," said Richard Sumner, managing partner of the Consumer Markets Practice for Europe and Africa at executive search firm Heidrick & Struggles. He pointed to increased activism from investors and CEOs being forced to drive innovation in the face of challenged margins and sales performance.
'ROCKY ROAD'
In 2023, Alan Jope, the former CEO of Unilever ULVR.L, the London-based maker of Dove soap, was out after less than five years as the company tried to offload its ice cream brands. Activist investment firm Trian Fund Management which has a seat on Unilever's board, endorsed Jope's successor.
Miguel Patricio led Kraft Heinz KHC.O for 4-1/2 years until late 2023 and while he remains a board member, the company said its change in leadership reflected thoughtful succession planning with an eye to growth.
Nicandro Durante exited Reckitt Benckiser RKT.L in 2023 after less than two years as CEO. His replacement, Kris Licht, was credited with engineering a turnaround in the company's health business.
"It's been a rocky road in consumer goods the last few years," Heidrick & Struggles' Sumner added. "The impact of Covid across the consumer products space has meant that sales spikes have gone up and down."
Shorter CEO tenures can also be partly explained by executives being worn out. Keeping up with consumer tastes as inflation surged has made the job much tougher, executive head-hunters, bankers and lawyers said.
But the speed with which some chiefs were terminated may point to a new trend: corporate boards are acting before outsiders publicly force them to.
Board members "worry about what the stock did during their tenure on the board and are ready to act more quickly to make sure that they preserve their desirability as a director," Barclay's Rossman said.
Even so, many boards are sticking with their executives even in the face of pressure from hedge funds, bankers said, but several said that the pace of calls to discuss questions like executive changes suggest greater nervousness.
Nestle and Starbucks share prices dropped this year -- more than 8% for Nestle and nearly 20% for Starbucks as the company struggled with sales in the United States and China. They recovered as CEOs were replaced, with Starbucks surging 25%, marking the biggest single day gain since going public.
As the pace of investor activism at corporations has picked up this year with shareholders pushing for changes at a record number of companies globally in the first half, corporate boards are under pressure.
Fixing a business or selling it often takes time and with impatient investors at the door, the fastest way to signal action is underway is by axing a top executive,bankers, lawyers and academics said.
"Repairing operational problems can't be done overnight," said Georgetown University professor Jason Schloetzer, an expert in corporate governance. "But what you can do more quickly is remove a board member or an executive. Heads rolling is meant to signify that change is coming."
US retail CEOs stay in office shorter than counterparts in finance, tech https://reut.rs/4e4B4B6
Reporting by Svea Herbst-Bayliss and Richa Naidu with additional reporting by Abigail Summerville. Editing by Vanessa O'Connell and Anna Driver
Aloqador aktivlar
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.
